M&A round II: Nokia-Siemens

M&A round II: Nokia-Siemens

Nokia and Siemens have decided to merge their carrier infrastructure businesses and create a 50/50 JV, called Nokia Siemens Networks. The deal should be worth €25bn. Nokia Siemens Networks should be, however, led by Nokia, based in Finland and not traded separately. The new company includes Nokia's Networks Business Group and carrier-related operations of Siemens Com, will have a turnover of about €15.8bn (6.6bn from Nokia and €9.2bn from Siemens Com) and about 60.000 staff when starting. Simon Beresford-Wylie, from Nokia, will be the new company's CEO, while Siemens board member Peter Schönhofer will be CFO. Siemens and Nokia said they expect the venture to produce costs synergies of $1.9bn by 2010. Nokia Siemens Networks will be the world's third largest telecom infrastructure company, behind a combined Alcatel/Lucent and Ericsson. It will also rank number two in mobile infra (to Ericsson) and number three in fixed line networks. 56% of Nokia Siemens Networks business should be in mobile infra, 22% in services to mobile carriers, and 16% in wireline infra and 6% in fixed line services. The combined unit should hold a 32% share of the GSM/WCDMA market – 31% in GSM and 33 % in WCDMA. What has to be looked at now, is the impact of the merger on their respective relationships: NEC and Juniper for Siemens, Cisco for Nokia.

The joint venture is expected to be finalized by the end of the year, pending regulatory approval.