Nokia and Siemens have announced a merger designed to
leverage their respective strengths in an attack on the fixed to mobile
convergence market. The new Joint Venture company will have revenues of EUR
15.8 billion (based on 2005 results).
The deal will bring together the Networks Business Group of
Nokia and the carrier-related operations of Siemens and will be called Nokia
Siemens Networks.
The company's say the new organisation will benefit from an
increased ability to invest in R&D, a complementary global based of customers
in developed and developing countries and one of the industry's largest and
most experienced service organisations.
"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. "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."
"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 new organisation will instantly become the second
largest company in mobile infrastructure, the second in services and the third
in infrastructure making it a force to be reckoned with for other telecommunications
providers.
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.
Some of the joint company's 60,000 staff may be waiting for
pink slips over the next three to four years as the new organisations seeks to
gain an estimated EUR 1.5 billion in cost synergies by 2010. These are expected
to come primarily from the elimination of overlapping functions, consolidation
and better utilisation of sales and marketing organizations, reduction of
overhead costs, sourcing benefits, and greater efficiencies in R&D.
A substantial portion of these synergies is expected to be
realised in the first two years, however, the "headcount adjustment" will take
place over a four year period and will see 10-15 per cent of the work force without
jobs.
The new company 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.
Simon Beresford-Wylie (currently Executive VP and General
Manager of Networks at Nokia) who got the nod as chief executive officer at
Nokia Siemens Networks said the joint venture "brings the two finest teams in
the communications industry together at an unprecedented time of industry
change."
The deal is expected to be finalised before the end of this
year, but is subject to customary regulatory approvals, the completion of
standard closing conditions, and the agreement of a number of detailed
implementation steps.
Related news items Newer news items
Older news items |
