Siemens (of Germany) and Nokia (of Finland) jointly announced today that they will merge their telecommunication network equipment businesses, reports the New York Times. The deal is valued at more than $30 billion.
The units in the 50-50 venture, “Nokia Siemens Networks”, had sales of 15.8 billion euros last year, which would make it the second biggest mobile equipment player and third in fixed infrastructure, the companies said on Monday.
The merger is likely to set off a new global wave of consolidation, predicts Light Reading, and a round of price wars as the telecommunication industry continues to remake itself after last decade’s boom-and-bust cycle says the NY Times. Om Malik has more, saw it coming and handicaps the competitors.
The deal follows the merger of Stockholm-based Ericsson with Marconi’s broadband Internet and telecommunications assets last October. In April, Paris-based Alcatel launched a $13.4 billion stock swap to acquire Lucent Technologies. Other big mergers include AT&T and BellSouth, in a proposed $67 billion stock deal and AT&T’s $16 billion merger with SBC in 2005.
EE Times reports the new enterprise, Nokia Siemens Networks, will combine Nokia’s mobile phone infrastructure business and Siemens’ carrier-related infrastructure business. By 2010, the 50:50 joint venture expects synergies of ¬1.5 billion ($1.9 bn). The synergies will result from the elimination of overlapping functions and greater efficiency in R&D. According to media reports here, between 6000 and 9000 jobs will be cut. The combined company will start operations with 60.000 employees.
Based on current market share data, Nokia Siemens Networks will be the second largest company in mobile infrastructure after Ericsson/Marconi, second in services, third in fixed-line infrastructure (after Alcatel/Lucent and Cisco) and the third largest in the overall telecommunications infrastructure market.
There are currently an estimated 2.5 billion users of cell phones around the world, a figure that is expected to increase as handset prices fall and operators lower subscription prices.
Light Reading, Forbes, Seattle PI, Washington Post and ZDNet have more.
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