Nokia and Siemens are merging their communications service provider arms to create a joint venture with combined 2005 revenue of almost 16 billion euros.
The 50/50 joint venture, dubbed Nokia Siemens Networks, sees the combination of Nokia`s Networks Business Group and Siemens` carrier-related operations for fixed and mobile networks.
According to a joint statement issued by Nokia and Siemens this morning, the venture will begin operating with 60 000 staff, but over the next four years staff numbers will be cut between 10% and 15% - between 6 000 and 9 000 people.
"Detailed headcount reduction assessments will be made as part of the integration planning process and subject to required consultation with employee representatives," the companies say.
Nokia and Siemens expect the merger will result in cost synergy of about 1.5 billion euros annually by 2010, coming mainly from eliminating overlapping functions, consolidating sales and marketing organisations and making better use of them, reducing overhead costs, sourcing benefits, and greater efficiencies in research and development.
"This joint venture is an important step to strengthen our position in the market sustainably and to enable us to offer the best state-of-the-art converged technologies and services to our customers," says Siemens CEO Klaus Kleinfeld.
The groups say that, based on current market share information, Nokia Siemens Networks will be the second largest company in mobile infrastructure, second in services, third in fixed infrastructure, and third in the overall telecoms infrastructure market.
Operational headquarters will be in Helsinki, Finland, while regional headquarters will be in Munich, Germany.
Simon Beresford-Wylie, now executive VP and GM of networks at Nokia, is to become CEO of the new venture once the merger is finalised - expected to happen before the end of the year.
Peter Sch"onhofer, a member of the executive board of Siemens Austria, will be CFO, while Nokia CEO Olli-Pekka Kallasvuo will chair the new venture.
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