NSN: surrounded by gloom as parents back away

As both Nokia and Siemens fail to give any indications of strong support for their mobile infrastructure JV--Nokia Siemens Networks--industry analysts are beginning to question what future the company has. The situation has become increasingly difficult following the €908 million write down made by Nokia for its stake in NSN, and comments from Siemens that it wanted to exit the JV.

Telecoms analysts have taken these pointers and heaped further gloom on NSN, maintaining that to float the company would have to be at a deep discount because of its loss making and declining market share. The notion of Nokia taking full control has been dismissed given that the Finnish company has sufficient strategic issues to resolve without the mountain of troubles that would come with acquiring NSN.

Other options being floated, and dismissed, include:

  • Ericsson--the company gained key assets on the cheap with its Nortel purchase, and doesn't need NSN.
  • Alcatel-Lucent--not in a position to make a major acquisition, and still struggling to merge the French and US technologies and culture.
  • Huawei--up and coming, but hidebound by all the usual political problems that such a deal would entail.
  • Private equity--could make a good restructuring story (for the very brave), with a focus on services.

In an attempt to lift the depressing picture, Nokia recently upgraded its estimates for the global mobile infrastructure market, predicting a 5 per cent fall in euro terms in 2009, compared with an earlier estimate of a 10 per cent decline.

However, while analysts cautiously accept that mobile operators might now be spending more on infrastructure, they forecast this will largely benefit Ericsson who will continue to pick up market share from NSN.

Adding further woes, a new report from Infonetics claims that Huawei is dramatically improving its global image, having good technology and offering strong value for money. Stéphane Téral of Infonetics said: "Huawei is overtaking Alcatel-Lucent on many fronts, and is now en route to attacking NSN's market position in the mobile infrastructure space. And watch out, because another Chinese telco equipment maker ZTE is on the rise as well."

For more on this story:
Rethink Wireless

Related stories:
Only room for three infrastructure vendors, claims incoming NSN boss
LTE: NSN claims first call made using commercial software
Nokia, Siemens search for exit out of NSN venture
NSN signs 3G networking deal, and aims for 10% profit margin

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