Sunday, June 18, 2006

Nokia Siemens Networks Targets Fixed-Mobile Convergence

Nokia and Siemens confirmed plans to merge their communications service provider businesses into a 50-50 joint venture consisting of Nokia's Networks Business Group and Siemens' carrier-related operations for fixed and mobile networks. The combined company would offer broad scale advantages, a "quadruple play" product portfolio and worldwide presence. The new venture would be especially well positioned for new opportunities in the convergence of fixed and mobile networks.

"The communications industry is converging, and a strong and independent Nokia Siemens Networks will be ideally positioned to help customers lower costs and grow revenue while managing the challenges of converging technology," said Olli-Pekka Kallasvuo, CEO of Nokia.

Some highlights of the new Nokia Siemens Networks:

  • The company's portfolio will include Next Generation Network convergence products like IMS, 2G GSM/EDGE access, 3G WCDMA/HSDPA access, extensive mobile core, fixed broadband, transport, IPTV, LTE, WiMAX and low-cost mobile voice products tailored for emerging market operators.

  • Based on current market share data, it will be the second largest company in mobile infrastructure, second in services, third in fixed infrastructure, and the third largest in the overall telecommunications infrastructure market.

  • 2005 calendar year pro forma revenues of EUR 15.8 billion.

  • Estimated cost synergies of EUR 1.5 billion annually by 2010, which are expected to come from the consolidation of sales and marketing organizations, reduction of overhead costs, sourcing benefits, and greater efficiencies in R&D.

  • The company would start operations with 60,000 employees. There would be a headcount adjustment over the next four years in the range of ten to fifteen percent from the initial combined base of approximately 60,000.

  • Simon Beresford-Wylie will become CEO and Peter Schonhofer to become CFO.

  • Nokia Siemens Networks will have its operational headquarters in the Helsinki, Finland metropolitan area, and have strong regional headquarters in Munich, Germany, where three of the future five divisions of the new company will be based.

  • The transaction closing is expected to take place before January 1, 2007 and is subject to customary regulatory approvals, the completion of standard closing conditions, and the agreement of a number of detailed implementation steps.

  • After closing, the financial results of Nokia Siemens Networks will be consolidated by Nokia and accounted for at equity by Siemens.
  • Siemens traces its roots back to the 1840s, when Werner von Siemens built a "pointer telegraph" in Germany. By 1848, the Siemens & Halske Telegraph Construction Company had built the first electrical long-distance telegraph line in Europe, extending from Berlin to Frankfurt/Main

  • Nokia traces its origins to 1912 and the establishment of the Finnish Cable Works, which supplied electrical and telephone cables, amongst other products. Nokia began work on its first radio telephone in 1963.

See also