Nokia Siemens to shutter services unit; 1,000 jobs to go

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Nokia Siemens Networks (NSN) will close its unprofitable services unit as it looks to reduce costs. The closure of the unit is part of a larger wave of asset sales the vendor announced this week.

As many as 1,000 German workers could see their jobs disappear after the vendor's management announced that the services unit wasn't profitable and no longer fitted with the company's strategy to focus on mobile broadband, according to Deutsche Welle.

NSN announced that the unit, which generates under €100 million in annual sales and provides network operations and management services to operators such as Vodafone, would stop operating at the end of the year, with employees in 16 different locations to be affected by the move.

NSN Germany CEO Hermann Rodler told a staff meeting in Nuremberg that huge efforts had been made of late to rescue the subsidiary. "Nevertheless, we've continued to be deeply in the red and a turnaround is not in sight," Rodler told Deutsche Welle.

Rodler added the closure was pushed forward after the vendor failed to renew a five-year maintenance contract with Deutsche Telekom.

NSN has previously stated that it would seek to exit non-core and low-margin contracts in the more commoditised telecoms equipment and services market.

However, this latest news of headcount reductions is in addition to the 17,000 job cuts already announced by the group at the end of 2011, which was the level of cost-cutting NSN said was needed to return the group to profitability.

Separately, NSN said it will sell its business support systems division to Canadian IT specialist Redknee as part of its efforts to dispose of non-core assets. The company said Redknee will pay €15 million, plus a maximum of €25 million for "performance-based cash earn-outs."

NSN has also agreed a deal to sell its optical networks business to Marlin Equity Partners which plans to form the unit into an independent new company with the goal of "becoming a leading provider in the optical market,"

The move will see some 1,900 workers, mostly in Germany, Portugal and China, being transferred to the new company, which is to be based in Munich, according to YLE News.

For more:
- see this Reuters article
- see this Deutsche Welle article
- see this Financial Times article (sub. req.)
- see this separate Reuters article
- see this ZDNet article
- see the YLE News article
- see this NSN release

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