Been speculated by Bloomberg, Nokia finally announced its taking over full control of its telecom’s joint-venture Nokia Siemens Network. It agreed to buy out partner Siemens in a €1.7 billion ($2.2 billion) deal. Nokia recorded a loss of $196 million during Q1 2013. Its said that this business turnover will help offset losses that Nokia has incurred from its hardware and Windows Phone business.
Nokia Siemens Networks was an unprofitable venture that both Nokia and Siemens had unsuccessfully tried to sell to private investors last year. A series of cost-cutting initiatives, which included the slashing of about 17,000 jobs had benefited the company. Nokia Siemens posted a 117 percent increase on the previous year, despite the value of net sales actually contracting 5 percent annually. It gives a profit of $1.2 billion during Q1 2013, while profit in Q4 2012 was higher still, coming in at $1.56 billion.
The company confirmed that the network will be renamed, but the new branding will be revealed once the deal is completed. The business is expected to become a wholly owned subsidiary of Nokia, during the third quarter of 2013.
About 80% of the amount will be paid in cash and the remainder via a secured loan due with Siemens one year, after the deal is closed.
Stephen Elop, President and CEO of Nokia, said in a statement, given to the media:
“With its clear strategic focus and strong leadership team, Nokia Siemens Networks has structurally improved its operational and financial performance. Furthermore, Nokia Siemens Networks has established a clear leadership position in LTE, which provides an attractive growth opportunity. Nokia is pleased with these developments and looks forward to continue supporting these efforts to create more shareholder value for the Nokia group.”