In a move addressing the trends of IP-based fixed mobile convergence and the need for economies of scale, driven in part by competition from Asian equipment suppliers, Nokia and Siemens earlier this summer announced plans to merge the Networks Business Group of Nokia and the carrier-related operations of Siemens into a new company with annual revenue of approximately $20 billion.
The 50-50 joint venture, to be called Nokia Siemens Networks, will combine Nokia’s wireless expertise with Siemens’ products on the wireline side. The company initially will place third behind the Alcatel-Lucent and Ericsson-Marconi megamergers. Klaus Kleinfeld, CEO of Siemens, however, says the goal is to push the new company up to second place in the overall telecom equipment market.
Following the combination, Simon Beresford-Wylie, executive vice president and general manager of networks at Nokia, will become CEO. Peter Schönhofer, a member of the Siemens AG Austria executive board, will assume the position of CFO.
Analysts and ratings companies generally were positive about the continued consolidation in the telecom equipment market. Nokia and Siemens executives said they are heading into the venture cash-flow positive and that the only losses will come from restructuring costs. The plan is to cut the 60,000 employee count by 10 percent to 15 percent.
“The Siemens-Nokia partnership looks to be a genuine symbiosis, without too much overlap,” says Infonetics Research analyst Richard Webb. “In our tracking of the radio access network equipment market, Nokia is definitely A-list, especially in the 3G segment, and combining this with the strength of Siemens in long-haul, core- and edge-fixed networks will create a carrier network heavyweight that could be more than the sum of its parts, a case of 2+2 = 5.”
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