[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Monday, 19 June 2006, 07:20 GMT 08:20 UK
Nokia and Siemens in network deal
Nokia phone screen
The reported deal relates to infrastructure, not handsets
Nokia and Siemens are to merge their mobile and fixed-line phone network equipment businesses to create one of the world's biggest network firms

Both companies will have a 50% stake in the infrastructure company, to be based in Nokia's home country of Finland.

The firms predict annual sales of 16bn euros ($20.2bn; 11bn) and cost savings of 1.5bn euros a year by 2010.

The move follows a tie-up between French phone equipment firm Alcatel and US company Lucent Technologies.

The new business, made up of Siemens' networks business group and Nokia's carrier-related operations, will be called Nokia Siemens Networks.

Consolidation trend

In a statement the firms said the company would have "a world-class fixed-mobile convergence capability, a complementary global base of customers, a deep presence in both developed and emerging markets and one of the industry's largest and most experienced service organisations".

It is to be run by Simon Beresford-Wylie, currently the boss of Nokia Networks.

If Nokia wants to be significant player on the networks side, a move like this was expected
Jari Honko, EQ Bank

The Wall Street Journal put the value of the deal, due to be completed by January 1 next year, at about 25bn euros.

There has been a move towards consolidation in the telecommunications infrastructure industry, largely because of low-price competition from Asia.

Analysts said it was a deal with long-term benefits.

"If Nokia wants to be significant player on the networks side, a move like this was expected and they had to do it," said Jari Honko of EQ Bank.

"In the longer perspective it's positive, but in the short term... integration of the units could be a painful process."

Scale factor

Annual savings will come from areas such as research and development costs.

The new firm will be one of the world's biggest phone equipment networks.

Analyst Ed Snyder of Charter Equity Research said the deal would have implications for the 60,000 staff employed by the companies.

"The merger gives Nokia and Siemens scale they couldn't get otherwise," he said.

"You're going to be able to get rid of a lot of people, basically. They share common markets."




VIDEO AND AUDIO NEWS
Nokia's vice president talks about the company's strategy



SEE ALSO
Nokia profit warning hits shares
21 Jul 05 |  Business
Alcatel merger 'will save $1.7bn'
03 Apr 06 |  Business
Mobile giants boost phone ranges
15 Jun 05 |  Business
Nokia warned by market regulators
26 May 05 |  Business
Profits up at Nokia and Motorola
21 Apr 05 |  Business
Siemens sells mobile-phone unit
07 Jun 05 |  Business

RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites




FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

PRODUCTS & SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific