ESPOO, FINLAND and MUNICH, GERMANY – Nokia Corporation and Siemens AG announced Monday that Nokia would buy out Siemens AG’s entire 50% stake in the companies’ telecoms equipment joint venture, Nokia Siemens Networks, for $2.33 billion.
The transaction is expected to close during the third calendar quarter of 2013, at which point Nokia Siemens Networks will become a wholly owned subsidiary of Nokia.
“With its clear strategic focus and strong leadership team, Nokia Siemens Networks has structurally improved its operational and financial performance. Furthermore, Nokia Siemens Networks has established a clear leadership position in LTE, which provides an attractive growth opportunity. Nokia is pleased with these developments and looks forward to continue supporting these efforts to create more shareholder value for the Nokia group,” said Nokia president and CEO Stephen Elop in a release.
Chris Nicoll, principal analyst at Analysys Mason, says the deal is a strategic move to strengthen both the NSN and Nokia brands by leveraging both ends of the mobile connection, similar to what Samsung is doing.
“With a resurgence by Nokia with the Lumia devices and growing LTE leadership on the part of NSN, Nokia is taking advantage of the opportunity to re-establish the company’s mobile market leadership in the growing LTE market, particularly in the European markets where NSN is an incumbent network supplier in many networks,” Nicoll writes in a research note.
With manufacturers like Samsung leveraging its industry Galaxy line and Huawei becoming more aggressive with its own device portfolio, Nicoll writes, Apparently Nokia also thought it needed full control over both sides of the connection and I expect it will use the control to speed to market more advanced networking features.”
The company will need to make some significant investments, however, in order to make up for NSN’s overall loss of market share, notes Nicoll.
