Nokia has decided to buy 50 % shares of Siemens from the telecom equipment joint venture (JV) between the companies. Nokia has agreed to pay €1.7 billion and buy German engineering giant’s half share in Nokia Siemens Networks (NSA). Nokia is fighting constantly to be back in the pool of Smartphones. It has no plans to integrate Nokia Siemens and may still seek for partners. The purchase price values the venture, which in turn has enhanced the profit to 3.4 billion Euros. But, as estimated by a Helsinki-based analyst, this profit earned from revenue was expected to be 5 billion Euros.
Siemens is trying to exit the telecommunication industry and has been taking a shift from wireless manufacturing to energy equipments. It will more focus on energy equipments, healthcare and infrastructure projects. And, hence, Nokia would like to take the NSA joint venture into its wing.
This decision of buying the share and taking charge over the joint venture is going to benefit Nokia, and will help the company to offset the losses incurred from its Windows Phone and hardware business. The Finnish company has recorded a loss of 196 million dollars during the Q1 2013. Nokia Siemens Networks was an unprofitable venture for both the companies, and they tried even to sell it to private investors last year. However, with the series of cost-cutting initiatives, a significant improvement in the earnings was seen that turned the company into the productive one.
Nokia is planning to complete the deal during the Q3 2013 report. Sources say that the business will become a wholly owned subsidiary of Nokia. It is confirmed that Nokia Siemens Networks will be renamed, and will be revealed once the deal get finalized.
President and CEO of Nokia, Stephen Elop said “With its clear strategic focus and strong leadership team, Nokia Siemens Networks has structurally improved its operational and financial performance. 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.”
The €1.7 billion deal will be paid with €1.2 billion in cash, and the remainder through a secured loan due with Siemens for one year after the deal is closed.