Nokia, Siemens to Merge in $30B Venture

Nokia Corp. executive Simon Beresford-Wylie speaks during a press conference in Cannes, France, in this Feb. 14, 2005, file photo. Beresford-Wylie will reportedly head a new company formed by the combination of Nokia's and Siemens' telephone equipment units. (AP Photo/Lionel Cironneau) (Lionel Cironneau - AP)

FRANKFURT, Germany -- Nokia Corp. and Siemens AG said Monday they will combine their network equipment units in a reported $30 billion joint venture to more effectively take on market leader LM Ericsson.

The combination _ to be called Nokia Siemens Networks _ would create one of the largest players in the industry, with $20 billion in annual sales. Besides Ericsson, it also puts pressure on Lucent, Alcatel, Motorola and Nortel Networks.

The 50-50 venture would comprise Nokia's network business group and Siemens' carrier-related operations, creating estimated savings of $1.9 billion by 2010 through an estimated 9,000 job cuts globally, Nokia said.

"The new company will and has to have an attitude of a challenger _ fiercely competitive with an unerring focus on the customer _ because at the end of the day, eventually, it is the customer who will decide," Nokia's new Chief Executive Olli-Pekka Kallasvuo said.

As the communications industry consolidates, he said, Nokia Siemens Networks would be well-positioned to help customers _ carriers and service providers _ lower costs and increase revenue while managing the challenges of converging technology.

Consumers never see the equipment, but experience it through more reliable service, faster connections and more features.

The deal is the latest in a wave of consolidation that began last October, when Stockholm-based Ericsson agreed to buy Marconi Corp.'s broadband Internet and telecommunications assets for about $2.1 billion. In April, Paris-based Alcatel launched a $13.4 billion stock swap for Lucent Technologies Inc.

The Siemens-Nokia venture is likely to put pressure on Motorola Inc., which will drop from the No. 3 provider of network equipment to No. 4. Also left out is Canada's Nortel Networks Corp.

In Frankfurt, shares of Siemens closed up 6.6 percent at 66.99 euros ($84.34) in Frankfurt, after surging as much as 8 percent earlier in the day. In Helsinki, shares of Nokia, which had risen as high as 5 percent, finished at 16.12 euros ($20.29), or up 3 percent.

Analysts have said there are an estimated 2.5 billion cell phone users around the world, a figure that is expected to increase as handset prices fall and operators lower subscription prices.

Mobile services providers such as T-Mobile, Vodafone or O2, are increasingly looking for the technology and equipment that will let them provide bigger, faster and better content to subscribers.

"Nokia has had difficulties being real strong on the network side. Now they will have a better position and this will also help on the cell phone side," said David Larsson, an analyst with IT Research in Stockholm.