Nokia buys Siemens out of telecoms equipment joint venture for €1.7bn

Nokia re-united with telecoms equipment arm as Siemens gets out of communications

Nokia has bought Siemens' 50 per cent stake in Nokia-Siemens Networks (NSN) for €1.7bn, enabling it to re-take full control of its telecoms network business.

"With its clear strategic focus and strong leadership team, Nokia Siemens Networks has structurally improved its operational and financial performance," said Nokia CEO Stephen Elop.

He added: "Furthermore, Nokia Siemens Networks has established a clear leadership position in LTE, which provides an attractive growth opportunity. Nokia is pleased with these developments and looks forward to continue supporting these efforts to create more shareholder value for the Nokia group."

NSN was established in April 2007 as a joint venture combining Nokia's Networks Business Group and Siemens' carrier-related operations for fixed and mobile networks. The joint venture move was originally made in response to intensifying competition in the telecoms equipment market from emerging Chinese manufacturers, such as Huawei and ZTE, and Samsung.

NSN, which had been effectively controlled by Nokia regardless of the 50-50 share ownership, will remain headquartered in Espoo, Finland, but the Siemens name will be phased out in favour of Nokia once the acquisition has closed.

The acquisition will help Nokia, which reported a pre-tax loss of €257m in the first quarter to improve its profitability. In contrast to Nokia, NSN turned a slim operating profit of €3m in its first quarter after years of cost cutting.

The purchase price of €1.7bn, breaks down into €1.2bn paid in cash at the close of the transaction in the third quarter, with the balance of €500m paid in the form of a secured loan from Siemens, with payment due in 2014, one year from closing. Nokia has obtained committed bank financing for the €1.2bn cash portion.