Nokia must back NSN buy with investment
Nokia has confirmed it will purchase Siemens' entire 50% stake in Nokia Siemens Networks for €1.7 billion ($2.22 billion).
Subject to regulatory approval, the company said it expects the transaction to close during calendar Q3. Once complete, NSN will become a wholly-owned subsidiary of Nokia.
NSN will be retitled to phase out Siemens' name from the branding, Nokia said. The venture's new name will be announced once the transaction closes.
Nokia plans to retain NSN's existing operational headquarters, as well as its management structure, with Rajeev Suri staying on as CEO and Jesper Ovesen as executive chairman.
Nokia will pay €1.2 billion of the purchase price in cash. The remaining €500 million will take the form of a secured one-year loan from Siemens.
The news of Nokia's planned buyout broke over the weekend before it was formally announced, and Siemens' exit from the venture had been expected for months.
Analysys Mason principal analyst Chris Nicoll said Nokia absorbing NSN “is a strategy move to strengthen both the NSN and Nokia brands by leveraging both ends of the mobile connection - similar to what Samsung is doing.” It underscores the fact that major smartphone vendors are taking an end-to-end view of the total mobile ecosystem.
With the acquisition, “Nokia is taking advantage of the opportunity to re-establish the company’s mobile market leadership in the growing LTE market,” he said.
But Nicoll cautioned that Nokia will need to make significant investments in NSN to address its subsidiary's loss of market share and delays with its LTE roadmap.