Nokia Siemens: Business as usual for now

While its parents ponder a likely divorce, former problem child Nokia Siemens Networks continues to shine, pursuing various business initiatives on the day that the six-year-old partnership agreement between Nokia (NYSE:NOK) and Siemens officially expired.

The parent companies have reportedly agreed to continue running their joint venture, while Siemens seeks a respectable exit.

In the meantime, NSN announced it won a contract to deploy an LTE network layer atop TIM Brasil's existing NSN-supplied 2G and 3G networks in the 2.6 GHz frequency band.

"Our long-term partnership with Nokia Siemens Networks has been excellent, and the 2G and 3G equipment installed by the company is performing so well that it was a natural decision to deploy an LTE network with the same vendor," said Marco di Costanzo, mobile network head at TIM Brasil.

NSN will supply TIM Brasil with its Flexi Multiradio Base Station, which enables a single radio access network (RAN) for GSM, 3G, FDD-LTE and TD-LTE. Nokia Siemens Networks will also upgrade TIM Brasil's NetAct network management system to enable consolidated monitoring, management and optimization of its network and will provide Intelligent Self Organizing Networks the capability for increased automation and faster rollout.

Implementation of the LTE network will be done on a city-by-city basis in preparation for Brazil's hosting of the Confederations Cup 2013 and Football World Cup 2014 events.

Flush with its recent successes, NSN is investing in facilities upgrades and R&D. The company is planning multimillion-dollar investments at its current property in Arlington Heights, Ill., which housed the former Motorola operations acquired by NSN, reported the Arlington Heights Patch.

NSN also intends to double the size of its NetworkLabs research & development facility in Quezon City, Philippines, which is focused on advancing 3G and 4G wireless technologies. "The R&D facility here already has 400 employees. It should be 460 by the end of the quarter because we just opened a new floor. It's definitely expanding this year," John Lancaster-Lennox NSN, Asia south sub-region head, told the Philippine Daily Inquirer.

"There's talk of doubling the size. We don't know how long that would take, but that's the direction we are taking," he added.

The facilities improvements and expansion are particularly noteworthy given that NSN has been working since late 2011 to slash up to 17,000 jobs and divest of non-core assets as it strives to surpass $1.33 billion in cost reductions by the end of 2013. For example, on March 30, Toronto-based Redknee announced the closing of its acquisition of NSN's Business Support Systems (BSS) business unit under a deal announced in December 2012.

NSN, which carries an estimated enterprise value of between $8 billion and $10 billion, has been a bright spot for Nokia of late, contributing more than 45 percent of Nokia's sales in 2012. Morgan Stanley has calculated that NSN represents about $1 a share for Nokia's stock price, which has been hovering around $3.25 per share. That means the Finnish vendor will likely try to hold onto NSN for the time being, though it will want to cash out eventually.

According to the Wall Street Journal, Morgan Stanley equities analyst Francois Meunier recently enumerated three potential scenarios for NSN if Siemens bails as expected. The first involves attracting a partner to fund Nokia's buying out Siemens' stake or ditching the effort altogether. The second includes Nokia rounding up a new shareholder, such as Alcatel-Lucent (NYSE:ALU), to take the place of Siemens, while yet another possibility would be an initial public offering.

For more:
- see this Nokia Siemens release
- see this Forbes article
- see this Philippine Business Inquirer article
- see this Arlington Heights Patch article
- see this Redknee release
- see this Wall Street Journal article (sub. req.)

Related articles:
Siemens CFO indicates company will exit Nokia Siemens JV
Nokia Siemens' Corker talks about LTE, small cells and Liquid Applications
Nokia Siemens CEO: We will be one of three surviving network vendors
Report: Nokia Siemens parents could use Alcatel-Lucent to exit JV
Nokia Siemens charges to profit in Q4 as sales increase, costs drop
Report: Nokia Siemens may raise as much as $1B in bonds

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