Tribunal to hear Nokia, Siemens merger

By Nicola Mawson for Siemens
Johannesburg, 01 Dec 2006

The Competition Tribunal is set to hear arguments on the merger between Siemens and Nokia's mobile and fixed-line network equipment business on Monday.

The Competition Commission has recommended the tribunal approve the merger without any conditions.

In terms of the proposed international transaction, Siemens and Nokia have agreed to transfer their mobile and fixed-line network equipment businesses to Nokia Siemens Network, a newly-incorporated joint venture company.

The merger is a 50:50 joint venture between the two companies, with both having equal control and interest in the new firm.

Reunert, which owns 40% of Siemens Telecommunications locally, says the merger will provide the new company will the impetus to take on an ever-expanding market.

Reunert CEO Gerrit Pretorius said during the company's annual results presentation on 20 November that the division, which reported operating profit up by 8%, counts among its clients Telkom, Vodacom, Cell C and MTN.

The new global company is set to come into effect on 1 January and, based on 2005 figures, is expected to see at least 16 billion euro in sales. Based on current market share data, it will be the second largest company in mobile infrastructure, second in services, third in fixed infrastructure, and the third largest in the overall telecommunications infrastructure market.

Synergy

In June, the companies announced their intention to merge, which is expected to save the new entity 1.5 billion euro a year by 2010.

The 50:50 joint venture is expected to "create a global leader with strong positions in important growth segments of fixed and mobile network infrastructure and services", said the companies at the time.

"We believe the partnership with Siemens is the most effective way to build the scale and broad product portfolio necessary to compete globally and create value for shareholders," said Nokia CEO Olli-Pekka Kallasvuo. "The communications industry is converging, and a strong and independent Nokia Siemens Networks will be ideally positioned to help customers lower costs and grow revenue while managing the challenges of converging technology."

"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," said Siemens CEO Klaus Kleinfeld.

"This combination creates a leading industry player with immediate strength, excellent potential for growth and well-positioned to improve future profitability."