FRANKFURT, Germany – Nokia and Siemens are merging their fixed and mobile communications businesses into a nearly 16 billion-a-year Euro company. The 50-50 venture, to be called Nokia Siemens Networks, will consist of Nokia’s Networks Business Group and Siemens’ carrier-related operations for fixed and mobile networks.
The two operations had pro forma revenues in calendar 2005 totalling 15.8 billion Euros. Based on current data, it will be the world’s second largest company in mobile infrastructure, second in services, third in fixed infrastructure, and the third largest in the overall telecommunications infrastructure market.
"We believe the partnership with Siemens is the most effective way to build the scale and broad product portfolio necessary to compete globally and create value for shareholders," said Olli-Pekka Kallasvuo, CEO of Nokia, who will serve as chair of the new Nokia Siemens 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."
The research and development team will invest in next generation fixed and mobile products and services, such as 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.
"This joint venture is an important step to strengthen our position in the market sustainably and to enable us to offer the best state of the art converged technologies and services to our customers," said Klaus Kleinfeld, CEO of Siemens. "This combination creates a leading industry player with immediate strength, excellent potential for growth, and well-positioned to improve future profitability."
The merger is expected to shave costs by 1.5 billion Euros annually through eliminating overlapping functions. The company will have approximately 60,000 employees worldwide to start, but will reduce headcount by 10 to 15% over the next four years, it says.
Nokia and Siemens expect the partnership to take effect by Jan. 1, 2007, subject to regulatory approval. It will be headquartered in Helsinki, Finland, with regional headquarters in Munich, Germany. The new CEO will be Simon Beresford-Wylie, currently Executive Vice President and General Manager of Networks at Nokia.
