The cost of overhauling the structure of Nokia Siemens Networks (NSN) will call for the owners, Nokia and Siemens, to pump at least €1 billion into the joint venture, according to a report in the German magazine Capital.
Having failed to sell a stake in the company, albeit that private equity firms spent considerable time reviewing the opportunity, the owners are now faced with funding the necessary investment to implement a much needed reorganisation. "There is no other option," an unnamed company insider told the magazine.
The report highlighted that NSN plans to issue a high-yield bond of up to €2 billion within the next few months for refinancing reasons. However, the company already has credit lines of €2 billion that will expire in June 2012 and will need to be replaced. Siemens CFO Joe Kaeser has said that Siemens might consider tapping the high-yield bond market at some point in the future.
Nokia Siemens spokesman Ben Roome declined to comment on the report. However, he noted that the second quarter of 2011 was NSN's fourth consecutive quarter of sales growth. NSN posted a €111 million operating loss in the second quarter.
"With sales of €3.6 billion, we were up 20 per cent since the same time one year ago (and 12.6 per cent when you exclude the Motorola business we acquired)," he told FierceWireless. "We recognise that, as we said on July 13, along with ongoing efforts to generate cost savings, Nokia Siemens Networks plans to take further steps to improve the competitiveness of the company as a standalone entity. For example, we plan to drive further efficiency while strengthening the company's innovation capabilities in mobile broadband, services and customer experience management to drive and support customer roadmaps."
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