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Nokia buys out Siemens to take control of networks business Nokia buys out Siemens to take control of networks business
(3 months later)
Finland's Nokia says it will buy out Siemens' 50% stake to take complete ownership of Nokia Siemens Networks, the joint venture which sells telecommunications equipment to mobile phone carriers in a €1.7bn (£1.45bn) deal.Finland's Nokia says it will buy out Siemens' 50% stake to take complete ownership of Nokia Siemens Networks, the joint venture which sells telecommunications equipment to mobile phone carriers in a €1.7bn (£1.45bn) deal.
The move will make Nokia a major player in supplying the infrastructure for mobile networks, with the NSN division becoming the largest inside Nokia – its revenues are roughly twice that of its handset business. The company had previous been seeking a buyer for its 50% stake – making the decision to buy out Siemens a surprise.The move will make Nokia a major player in supplying the infrastructure for mobile networks, with the NSN division becoming the largest inside Nokia – its revenues are roughly twice that of its handset business. The company had previous been seeking a buyer for its 50% stake – making the decision to buy out Siemens a surprise.
The transaction will be completed during the third quarter of the year, the company announced. The move is a surprise, as Nokia had appeared to be seeking a buyer for the division for more than a year after suffering operating losses in five of the past nine financial quarters. It has made operating profits for the past three quarters, and generates almost exactly as much revenue as its handset business. Nokia's latest financial quarter ended and it will report the results on 18 July.The transaction will be completed during the third quarter of the year, the company announced. The move is a surprise, as Nokia had appeared to be seeking a buyer for the division for more than a year after suffering operating losses in five of the past nine financial quarters. It has made operating profits for the past three quarters, and generates almost exactly as much revenue as its handset business. Nokia's latest financial quarter ended and it will report the results on 18 July.
Nokia's chief executive Stephen Elop said that the network operations arms had strengthened its financial performance and that progress in high-speed connections – principally LTE connections now being rolled out by network operators – is "an attractive growth opportunity". He said NSN had achieved a "clear leadership position" in providing the technology to network operators.Nokia's chief executive Stephen Elop said that the network operations arms had strengthened its financial performance and that progress in high-speed connections – principally LTE connections now being rolled out by network operators – is "an attractive growth opportunity". He said NSN had achieved a "clear leadership position" in providing the technology to network operators.
NSN has been challenged by the growth of rivals such as China's Huawei, which in 2012 overtook Ericsson as the largest telecommunications supplier in the world, and overtook NSN in revenues at the end of 2011.NSN has been challenged by the growth of rivals such as China's Huawei, which in 2012 overtook Ericsson as the largest telecommunications supplier in the world, and overtook NSN in revenues at the end of 2011.
But NSN seems to see potential in the LTE equipment supply business. Huawei has also seen itself shut out of a number of national markets, including the US and Australia, because of security fears relating to the Chinese ownership of the company and the essential role of telecoms for national security and communications.But NSN seems to see potential in the LTE equipment supply business. Huawei has also seen itself shut out of a number of national markets, including the US and Australia, because of security fears relating to the Chinese ownership of the company and the essential role of telecoms for national security and communications.
Nokia's once-dominant handset business is coming under growing pressure from rivals such as Samsung and Chinese "white box" makers selling cheap Android handsets, and it has not so far achieved a substantial share in the more valuable smartphone business.Nokia's once-dominant handset business is coming under growing pressure from rivals such as Samsung and Chinese "white box" makers selling cheap Android handsets, and it has not so far achieved a substantial share in the more valuable smartphone business.
The Wall Street Journal reported in June that Microsoft had considered buying the company for its handset business – which might have coincided with the attempts to sell the network division – but that the US software giant had dropped the idea. The purchase of the rest of NSN would therefore bolster the company's broader portfolio and give it resilience against dips in the handset business.The Wall Street Journal reported in June that Microsoft had considered buying the company for its handset business – which might have coincided with the attempts to sell the network division – but that the US software giant had dropped the idea. The purchase of the rest of NSN would therefore bolster the company's broader portfolio and give it resilience against dips in the handset business.
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