Nokia and Siemens announce US$30 billion-plus merger

Both Nokia and Siemens will put their network infrastructure operations into the new Nokia Siemens Networks, believed to be based in Nokia’s home country of Finland. Nokia’s current executive VP and general manager of networks, Simon Beresford-Wylie will become CEO.

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By  Alex Ritman Published  June 19, 2006

Nokia and Siemens have agreed on a deal that will combine their respective telecoms infrastructure businesses. The deal, said to be worth as much as US$35.5 billion, will see Nokia’s Networks Business Group and Siemens’ carrier-related operations for fixed and mobile merge to form a 50-50 joint-venture. The new Nokia Siemens Networks will have combined annual sales of US$25 billion, making it one of the world’s largest telecoms infrastructure suppliers. Based on current market share data, Nokia Siemens Networks will be the second largest company in mobile infrastructure, second in services, third in fixed infrastructure, and the third largest in the overall telecoms infrastructure market. According to Nokia, the cost synergies from the new merger will reach US$1.9 billion by 2010, with greater R&D efficiencies and consolidation of sales and marketing. Over the next four years, a “headcount readjustment” is expected to take place, which Nokia says will affect 10-15% of the current 60,000 combined workforce. Both Nokia and Siemens will put their network infrastructure operations into the new Nokia Siemens Networks, believed to be based in Nokia’s home country of Finland. Nokia’s current executive VP and general manager of networks, Simon Beresford-Wylie will become CEO. Peter Schonhofer, currently a member of the board of Siemens Austria, will become CFO. Nokia is thought to be retaining a majority of the board seat. Having shed its mobile handset business last year to BenQ, Siemens’ challenged telecoms infrastructure business has been shrouded in doubt for some time. It was believed that it would be bought outright, with the Alcatel-Lucent merger announced earlier this year raising expectation that consolidation within the vendor community is set to gather further momentum.

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