Joint Force

FRANKFURT, June 19, 2006 (AFP) – Finnish telecommunications giant Nokia and German rival Siemens said Monday they would merge their telecoms equipment and network activities in an attempt to close the gap on market leader Ericsson.

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