Further fueling the consolidation in the telecommunications equipment and technology market, two giants in the business are merging their respective telecom gear businesses — Nokia and Siemens will merge into a single company, according to the Wall Street Journal. In a deal valued at €25 billion ($31.5 billion), Finnish Nokia and German Siemens will combine their telecommunications businesses in a new company to be headquartered in Finland and run by Nokia’s executive Simon Beresford-Wylie.
This move follows the recent merger of Alcatel and Lucent and comes on the heels of consolidation in these suppliers’ main customers — phone companies. The telco consolidation craze is underway globally, but has been particularly acute in the U.S., with Verizon buying MCI, SBC purchasing AT&T and AT&T then announcing an acquisition of BellSouth, among other U.S. combinations over the past two years. Another U.S. carrier, Qwest, may be polishing itself in preparation for a sale.
As the Journal piece also points out, European and U.S. technology suppliers are coming under increasing competitive pressure from lower cost, more nimble Asian companies such as Huawei Technologies Co. and ZTE Corp. The combination of Nokia and Siemens will result in a company on par with rivals Sweden’s Ericcson and the merged Alcatel-Lucent. Although Siemens had long been rumored to be on the block (I had heard earlier this year that talks between Siemens and Canada’s Nortel were very close to fruition), company executives recently maintained that unit, the largest division within the German global technology giant, was actually in the market to buy a rival.
Update: For readers who can’t get behind the WSJ’s firewall, the New York Times now has coverage of this merger, which is slated to be announced tomorrow.
Cynthia Brumfield at 8:06 PM|Comments(0)
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