Nokia and Siemens on Monday said that they intend to merge the networks business group of Nokia and the carrier-related operations of Siemens into a new company, to be called Nokia Siemens Networks. The 50-50 joint venture will create a communication company with strong positions in important growth segments of fixed and mobile network infrastructure and services.

Based on the 2005 calendar year, the combined company had ?15.8 billion in pro forma annual revenues and is expected to start operations with 60 000 employees. 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.

Nokia Siemens Networks will be able to offer its operator customers a comprehensive portfolio of fixed and mobile network products supported by a full range of professional services. The company's portfolio will include next generation network convergence products like IMS, 2G GSM/EDGE access, 3G WCDMA/HSDPA access, extensive mobile core, fixed broadband, transport, IPTV, LTE, WiMAX and low-cost mobile voice products tailored for emerging market operators.

Earlier Siemens has joined forces with BenQ and virtually transferred its cell phone business to the Asian partner. It also formed partnership with Japan's Fujitsu to sell computers under Fujitsu-Siemens brand-name in Europe. With the alliance with Nokia, Siemens?own-brand products will be mainly intended for lucrative automation and control, medical, power and transportation industries. The company will also perform business services, energy services, financial services, industrial services and so on. Nokia's network business division has been looking for a partner as well, it was even rumoured that Cisco might be interested in acquisition of an appropriate Nokia's arm.

By combining network businesses, Nokia and Siemens will be able to cut-down workforce by 10% to 15% from 60 000, increase efficiency of research and development (R&D) and realign product lineup to become more competitive.

Nokia Siemens Networks will have its operational headquarters in the Helsinki, Finland metropolitan area, and have strong regional headquarters in Munich, Germany, where three of the future five divisions of the new company will be based. Simon Beresford-Wylie, currently executive vice president and general manager of Networks at Nokia, will assume the position of chief executive officer immediately upon the closing of the merger.

The transaction closing is expected to take place before January 1, 2007 and is subject to customary regulatory approvals, the completion of standard closing conditions, and the agreement of a number of detailed implementation steps. After closing, the financial results of Nokia Siemens Networks will be consolidated by Nokia and accounted for at equity by Siemens.