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Nokia Buys Out Siemens Telecom Networking Joint Venture

Nokia Buys Out Siemens Telecom Networking Joint Venture
By Jennifer LeClaire

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Will ailing Nokia continue as a stand-alone company or will it be acquired? "This deal does not answer that question, but it does financially strengthen the company, at least for the short-term," said analyst Jeff Kagan of Nokia's decision to buy out Siemens' share in Nokia Siemens Networks. "I get the sense that this is just the beginning of a wave of changes."
 


With strong business on the LTE networking front, Nokia is buying out Siemens AG's 50 percent stake in their joint venture, Nokia Siemens Networks. The boards of both companies have already approved the 1.7 billion euro ($2.2 billion) deal.

Stephen Elop, president and CEO of Nokia, said the joint venture has "structurally improved its operational and financial performance," and pointed to its "clear leadership position in LTE, which provides an attractive growth opportunity."

Nokia Siemens Networks was established on April 1, 2007, as a joint venture combining Nokia's Networks Business Group and Siemens' carrier-related operations for fixed and mobile networks.

Nokia's Bold Move

Nokia Siemens Networks, which focuses on offering mobile broadband technology and services, has in fact become a strong global provider of telecommunications infrastructure. The company's networks help people stay connected in more than 150 countries.

After the merger is complete, Nokia Siemens Networks will become a wholly owned subsidiary of Nokia. Joe Kaeser, Siemens CFO, said his company would move on to strengthen its core areas of energy management, industry, infrastructure and healthcare.

To gain perspective on the deal, we turned to Jeff Kagan, a telecom industry analyst. Kagan told us he sees it as a good move for the company.

"This will be very helpful to Nokia as it sorts through opportunities in the changing marketplace. What happens next? Does Nokia sell the company? Perhaps, according to Nokia CEO Stephen A. Elop," Kagan said. "The Nokia wireless handset business has been struggling over the last few years."

What's Next for Nokia?

Once the No. 1 handset maker, Nokia lost its footing in the smartphone wave started that saw the rise of Apple's iPhone, Google's Android and Samsung with its Galaxy devices. So what is the future for Nokia? Will it continue as a stand-alone company or will it be acquired?

"This deal does not answer that question, but it does financially strengthen the company, at least for the short-term," Kagan said. "I get the sense that this is just the beginning of a wave of changes that Nokia will go through. If they can start to succeed again in the smartphone business things could settle down, but without that I think we are going to see Nokia change."

Nokia plans to retain the existing management and governance structure at Nokia Siemens Networks. Rajeev Suri will remain CEO and Jesper Ovesen stays on as executive chairman of the Nokia Siemens Networks Board of Directors. But the Siemens name will be phased out from Nokia Siemens Networks' company name and branding. Nokia and Nokia Siemens Networks plan to confirm the new name and brand at the closing of the transaction.
 

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