Nokia Siemens said it will sell its WiMAX business to NewNet Communication Technologies, a communications company backed by a private equity firm. The sale is the first major asset sale by NSN since it announced last week a major restructuring that could lead to it cutting 17,000 jobs, or 23 percent of its workforce.
In a statement, the two companies said that NewNet will acquire NSN's complete WiMAX product portfolio, including related employees and assets as well as active customer and supplier contracts. Around 300 employees will be transferred to NewNet.
Terms of the deal were not disclosed and the companies said they expect to close the deal by Dec 31. NewNet is owned by California-based private equity firm Skyview Capital LLC.
Nokia Siemens said last week that it plans to focus exclusively on the mobile broadband market, and said it will shed or shutter unrelated businesses, a move that analysts praised. NSN said it plans to cut 17,000 workers by 2013, for a total cost savings of around €1 billion, or $1.34 billion. The WiMAX business was one of many that NSN has said it will either exit or put on "maintenance mode." Other areas that will get similar treatment include fixed-line VoIP, broadband access, narrowband, carrier Ethernet, business support systems and communications and entertainment solutions.
Separately, NSN is seeking a special type of business loan worth up to €1.5 billion, or $2 billion, as it seeks to shore up its finances, according to a Bloomberg report.
The news is notable in light of comments recently made by Nokia Siemens CEO Rajeev Suri that the infrastructure vendor will not receive additional financial support from its parent companies, Nokia (NYSE:NOK) and Siemens. According to the report, which cited three unnamed sources, NSN is seeking a forward-start loan, which locks in financing before debt comes due in return for higher fees and interest rates. The report said the borrowing for NSN will come due next June and replace a $2.67 billion credit line.
"We are looking at how to manage our external debt maturities in the normal course of business. We have always explored multiple options to strengthen our financing," NSN spokesman Ben Roome told FierceWireless. "Our existing revolving credit facility does expire in mid-2012, but we have no further update on our financing at this time."
NSN CEO: Parent companies will not contribute more cash to JV
Analysts: NSN's focus on mobile broadband smart move
NSN to shed 17,000 jobs
Nokia Siemens sells microwave unit to DragonWave
Nokia, Siemens inject €1B into NSN, mull IPO possibility
Nokia Siemens cuts up to 1,500 Motorola staff, GSM and WiMAX teams hit first