Nokia and Siemens said in a joint statement they planned to set up a 50-50 joint venture, to be called Nokia Siemens Networks, which would combine Nokia's networks business division and Siemens' carrier-related operations for fixed and mobile networks.
The deal was expected to close before January 1, 2007, pending the necessary regulatory approvals.
Nokia Siemens Networks would have annual sales of close to 16 billion euros (20 billion dollars) and a workforce of 60,000, making it number three in the sector behind Ericsson and Alcatel/Lucent.
It would be headed by Simon Beresford-Wylie, currently head of Nokia Networks, and have its operational headquarters in Helsinki. But three out of the group's future five divisions would be based in Munich.
The tie-up of the two businesses would lead to annual cost-cutting of 1.5 billion euros by 2019, primarily via the elimination of overlapping functions, better utilisation of sales and marketing organisations, reduction of overhead costs, improved sourcing and more efficient research and development, Nokia and Siemens said.
The integration of the two businesses would also lead to job cuts, with 10-15 percent of the combined 60,000-strong workforce to be reduced over the next four years.
"We believe the partnership with Siemens is the most effective way to build the scale and broad product portfolio necessary to compete globally," said Nokia chief executive Olli-Pekka Kallasvuo.
"The communications industry is converging, and a strong and independent Nokia Siemens Networks will be ideally positioned to help customers lower costs and increase revenue while managing the challenges of converging technology," he said.
Source: AFP
