Nokia has confirmed that an initial public offering is an option for the troubled infrastructure vendor Nokia Siemens Networks (NSN) that it co-owns with Germany's Siemens. The two firms have just pumped another €500 million each into the unprofitable JV as it struggles to compete with Ericsson and fast-growing Chinese vendors.
While the idea of an IPO has been floated in the past, what has tweaked observers' interest is the appointment of Jesper Ovesen as NSN's new executive chairman, replacing former Nokia CEO Olli-Pekka Kallasvuo, who had served as non-executive chairman and stepped down from his role.
According to Evli Bank analyst, Mikko Ervasti, Ovesen's background and experience supports the option of an IPO for NSN. "An IPO is something that needs to be considered for NSN," he told Dow Jones Newswires. "And now there is a person on the board of NSN with the right experience and contacts needed for a listing."
Nokia and Siemens representatives said the company is focused on improving operationally and financially before thinking about an IPO. Nokia and Siemens said in July that they were abandoning talks with private-equity firms to buy a stake in NSN.
Ovesen served as CFO of Danish telecommunications group TDC during the company's restructuring and initial public offering. However, before this could happen, according Swedbank's Hakan Wranne, NSN needs to become cash-flow positive. "This billion that NSN has been given by its owners won't last long if they don't turn around their cash flow and right now the prospects for that don't look brilliant," he told Dow Jones Newswires.
Adding to the debate, Michael Hagmann, an analyst at Nomura in London, told Bloomberg: "Ovesen may be able to do another successful restructuring just as he seems to have done at TDC [the Danish telecom group]. At the end it may take a little bit longer until demand in this industry finally improves enough for Siemens to be able to offload its stake," according to Bloomberg.
This investment came came as Nokia announced further job cuts of 2,200 with the closure of its handset plant in Romania, while the reorganisation of its mapping business will see another 1,300 workers leave the company. Nokia also hinted that it was reviewing the long-term future of handset factories in Finland, Hungary and Mexico.
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