Nokia buys out Siemens stake in joint venture

NOKIA has struck a deal with German giant Siemens to buy out its 50 per cent stake in the two firms’ joint venture for €1.7bn (£1.5bn).

The Finnish company expects to take full control of Nokia Siemens Networks (NSN), which makes equipment for mobile networks, in the third quarter of the year. The companies failed to sell off a stake in the business just two years ago, but NSN has recently become Nokia’s most successful unit as its more recognisable mobile phone unit has seen its market share squeezed by the likes of Apple and Samsung.

Nokia’s shares rose as much as six per cent on the news yesterday morning before falling back to finish 3.7 per cent up. Chief executive Stephen Elop said the roll-out of 4G networks, otherwise known as LTE, would come as a boost to NSN as telecoms firms around the world invest in delivering higher mobile speeds.

“Nokia Siemens Networks has established a clear leadership position in LTE, which provides an attractive growth opportunity,” Elop said. He added that the unit’s headquarters would stay at Nokia’s base in Espoo, Finland, and that NSN’s name would be changed to reflect its single owner.

“With this transaction, Nokia buys itself a future, whatever happens in smartphones,” said Pierre Ferragu at Bernstein Research. He said that Nokia had bought the NSN stake at a good price, although warned that it would place greater strain on the firm’s balance sheet. Nokia did not pay a dividend for the first time in its 143-year history in January due to cash issues.