EU has approved the Siemens-Nokia merger into a 50-50 JV (Joint Venture) firm called Nokia Siemens Networks.
Nokia & Siemens got approval from European Commission to merge the majority of their telecommunication network businesses in a bid to become among the top players in mobile industry, according to news published in Reuters.
As per commission, the merger will not have any significant effects on competition in European market. EU's market investigation has revealed that, though the merged organization would have considerable shares in the market, mobile equipment industry structure would still be competitive. A sufficient amount of credible players will remain in market, including Alcatel-Lucent & Ericsson, the market leader, the commission said.
Regulators didn't see any problems in other fields in which Siemens & Nokia were involved like fixed-line network equipment services & related fixed-line & mobile services.
The deal lays the foundation for third biggest network firm in the world, which will be known as Nokia Siemens Networks. A 50-50 JV, the new company is forecasted to make annual sales of US $ 20.6 billion & generate cost savings amounting to US $ 1.9 billion annually by 2010, with majority of gains coming from cutting down of about 9,000 jobs & pooling of development & research costs. The deal value is projected at US $ 32 billion.
Analysts believe that the new firm will possess a substantial presence in 3 major sectors: VOIP (Voice over Internet Protocol, 15 %), DSLAM (Digital Subscriber Line Access Multiplexer, 9 %) & optical equipment (7 %).
"Siemens holds a significant presence in IPTV market & both the firms are also working for development of their IMS (IP Multimedia Subsystem) offerings. The new venture will also look to capitalize in these sectors," said an analyst at RNCOS.
In June this year only, Nokia & Siemens revealed their plans to respectively merge their Networks business & carrier-related services for mobile & fixed-line networks to create a new firm, known as Nokia Siemens Networks.
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