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Nokia and Siemens to merge
their communications carrier networks
businesses. New global network leader for
fixed–mobile convergence |
• Companies form Nokia Siemens Networks
with 2005 calendar year pro forma revenues of
EUR 15.8 billion.
• 50.50 joint venture to consist of Nokia’s
Networks Business Group and Siemens’
carrier.related operations for fixed and mobile
networks.
• Broad scale advantages, leading ‘quadruple
play’ product portfolio and worldwide presence.
• Market strength and leading position in
fixed.mobile convergence.
• Estimated cost synergies of EUR 1.5 billion
annually by 2010.
• Simon Beresford.Wylie to become chief
executive officer and Peter Schönhofer to become
chief financial officer.
Nokia and Siemens announced that they intend to
merge the Networks Business Group of Nokia and
the carrier. related operations of Siemens into a
new company, to be called Nokia Siemens
Networks. The 50.50 joint venture will create a
global leader with strong positions in important
growth segments of fixed and mobile network
infrastructure and services.
The combined company is positioned to lead the
development and implementation of
revenue.generating and cost.saving products and
services via its scale and global reach. Nokia
Siemens Networks will have one of the world’s
best research and development teams, with the
ability to invest in next generation fixed and
mobile product platforms and services. The new
company will 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
organizations.
“We believe the partnership with Siemens is the
most effective way to build the scale and broad
product portfolio necessary to compete globally
and create value for shareholders,” said Olli.Pekka
Kallasvuo, CEO of Nokia. “The communications
industry is converging, and a strong and
independent Nokia Siemens Networks will be
ideally positioned to help customers lower costs
and grow revenue while managing the challenges
of converging technology.” Olli.Pekka Kallasvuo
will serve as chairman of Nokia Siemens
Networks.
“This joint venture is an important step to
strengthen our position in the market
sustainably and to enable us to offer the best
state of the art converged technologies and
services to our customers,” said Klaus Kleinfeld,
CEO of Siemens. “This combination creates a
leading industry player, with immediate
strength, excellent potential for growth and
well.positioned to improve profitability in the
future.”
Strong player with scale and powerful
convergence portfolio
Based on the 2005 calendar year, the combined
company had EUR 15.8 billion in pro forma annual
revenues and is expected to start operations
with 60,000 employees. Based on current market
share data, it will be the second largest
company in mobile infrastructure, second in
services, third in fixed infrastructure and the
third largest in the overall telecommunications
infrastructure market.
Nokia Siemens Networks will be able to offer its
operator customers a comprehensive portfolio of
fixed and mobile network products supported by a
full range of professional services. The
company’s portfolio will include Next Generation
Network convergence products like IMS (IP
Multimedia Subsystem), 2G GSM/EDGE access
(Enhanced Data rates for GSM Evolution), 3G
WCDMA/HSDPA access (Wideband Code Division
Multiple Access/High Speed Downlink Packet
Access), extensive mobile core, fixed broadband,
transport, IPTV (Internet Protocol Television),
LTE (Long Term Evolution), WiMAX (Worldwide
Interoperability for Microwave Access) and
low.cost mobile voice products tailored for
emerging market operators.
Extensive synergy benefits
The estimated cost synergies of EUR 1.5 billion
annually by 2010 are expected to come primarily
from the elimination of overlapping functions,
consolidation and better utilization of sales
and marketing organizations, reduction of
overhead costs, sourcing benefits, and greater
efficiencies in R&D. A substantial portion of
these synergies is expected to be realized in
the first two years.
These changes are expected to result in a
headcount adjustment over the next four years in
the range of ten to fifteen percent from the
initial combined base of approximately 60,000.
Detailed headcount reduction assessments will be
made as part of the integration planning process
and subject to required consultation with
employee representatives.
Global company and leadership
Nokia Siemens Networks will have its operational
headquarters in the Helsinki, Finland,
metropolitan area, and have strong regional
headquarters in Munich, Germany, where three of
the future five divisions of the new company
will be based.
Simon Beresford-Wylie, currently Executive Vice
President and General Manager of Networks at
Nokia, will assume the position of chief
executive officer immediately upon the closing
of the merger. “Nokia Siemens Networks brings
the two finest teams in the communications
industry together at an unprecedented time of
industry change,” said Simon Beresford-Wylie. “I
know the power of the Nokia team and have a deep
appreciation for the quality and spirit of the
people of Siemens. Together, the collective
Nokia and Siemens teams will be a powerful force
in the industry as we pursue our future goals of
providing unequaled customer satisfaction and of
becoming the undisputed industry champion.” In
addition to Simon Beresford-Wylie, Peter Schönhofer will assume the position of CFO.
Schönhofer is currently a member of the
executive board of Siemens AG Austria.
The transaction closing is expected to take
place before January 1, 2007 and is subject to
customary regulatory approvals, the completion
of standard closing conditions, and the
agreement of a number of detailed implementation
steps. After closing, the financial results of
Nokia Siemens Networks will be consolidated by
Nokia and accounted for at equity by Siemens.
About Nokia
Nokia is a world leader in mobile
communications, driving the growth and
sustainability of the broader mobility industry.
Nokia connects people to each other and the
information that matters to them with
easy-to-use and innovative products like mobile
phones, devices and solutions for imaging,
games, media and businesses. Nokia provides
equipment, solutions and services for network
operators and corporations.
About Siemens
Siemens (Berlin and Munich) is a global
powerhouse in electrical engineering and
electronics. The company has around 461,000
employees working to develop and manufacture
products, design and install complex systems and
projects, and tailor a wide range of services
for individual requirements. Siemens provides
innovative technologies and comprehensive
know-how to benefit customers in 190 countries.
Founded more than 155 years ago, the company
focuses on the areas of Information and
Communications, Automation and Control, Power,
Transportation, Medical, and Lighting. In fiscal
2005 (ended September 30), Siemens had sales
from continuing operations of EUR 75.4 billion
and income from continuing operations of EUR
3.058 billion. Further information is available
on the Internet at:
www.siemens.com.
Forward Looking Statements
This announcement includes “forward-looking
statements” and information which are not
historical facts. These statements are based on
the current expectations of the management of
Nokia and Siemens and are naturally subject to
uncertainty and changes in circumstances. The
forward-looking statements contained herein
include statements about the expected timing and
scope of the merger of Nokia’s and Siemens’
communications service provider businesses,
anticipated growth potential and earnings
enhancements, estimated profitability levels,
sources, timing and amount of estimated cost
synergies, leadership and market position,
future product portfolio, geographic coverage
and customer base, future investments in
technologies and services and all other
statements in this announcement other than
historical facts. Forward-looking statements
include, without limitation, statements
typically containing words such as “believe”,
“expect”, “anticipate”, “foresee”, “target”,
“estimate”, “designed”, “plans”, “will” or words
of similar meaning. By their nature,
forward-looking statements involve risk and
uncertainty because they relate to events and
depend on circumstances that will occur in the
future. There are a number of factors that could
cause actual results and developments to differ
materially from those expressed or implied by
such forward-looking statements. These factors
include, but are not limited to, the
satisfaction of the conditions to the merger and
closing of the transaction, and Nokia’s and
Siemens’ ability to successfully integrate the
operations and employees of their respective
communications service provider businesses, as
well as additional factors relating to, for
example, developments in the mobile
communications industry, changes in technology
and the ability to develop or otherwise acquire
complex technologies as required by the market
with full rights needed to use, timely and
successful commercialization of new advanced
products and solutions, intensity of competition
and various other factors. More detailed
information about certain of these factors is
contained in Nokia’s and Siemens’ filings with
the SEC, which are available on their respective
website,
www.nokia.com and
www.siemens.com, and on the SEC’s website
www.sec.gov. Other unknown or unpredictable
factors or underlying assumptions subsequently
proving to be incorrect could cause actual
results to differ materially from those in the
forward. looking statements. Neither Nokia nor
Siemens undertake any obligation to update
publicly or revise forward. looking statements,
whether as a result of new information, future
events or otherwise, except to the extent
legally required. In addition to
"forward. looking statements", this announcement
also includes certain terms like "joint
venture", "partnership" or words of a similar
nature describing the new company, or the new
companies, resulting from the merger, which
words are used in this announcement in their
generic sense and the common language meaning
and do not imply, or intend to imply, any
specific legal, tax, accounting or other
regulatory or officially standardized definition
or meaning.
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