New York: Nokia Corp and Siemens AG have shifted their focus to restructuring their joint venture in telecommunications-networking equipment, after failing to reach a deal with bidders for a controlling stake in the unprofitable business, says a media report.
“Nokia Corp and Siemens AG have shifted their focus to restructuring their joint venture in telecommunications networking equipment, after failing to reach a deal with bidders for a controlling stake in the unprofitable business,” The Wall Street Journal reported citing a source.
In the latest blow to beleaguered cellphone maker Nokia, which controls the venture, the company and Siemens now are exploring a “self-help” deal for the business, which is known as Nokia Siemens Networks, the report said.
Under such a deal, each company might put more cash into the venture, the report added.
Nokia Siemens Networks is a 50-50 joint venture between Finnish mobile phone maker Nokia Corp and German telecom company Siemens AG.
Meanwhile, the report said that Siemens, the financially sounder of the two, might also look to take control of the joint venture. Another option doing the rounds is for private equity firms to take a minority stake that would bring in cash into the joint venture for the restructuring.
The joint venture, which is one of the largest telecommunications equipment suppliers in the world, has been a financial burden for both the groups for much of the time since its inception in April, 2007.
However, neither partner was seeking an early exit, but it is now facing a string of losses and a shrinking customer base. The joint venture officially ends in 2013, and both Nokia and Siemens had earlier confirmed their committed to the joint venture until then.
According to the publication, Nokia Siemens, which has more than 60,000 employees and had nearly $20 billion in revenue last year, declined to comment, while representatives for Siemens couldn’t be reached for comments.
In late August, 2010, Nokia Siemens said that it was in talks with several private equity firms such as The Blackstone Group, Gores Group, Kohlberg Kravis Roberts & Co LP, Silver Lake Partners, Bain Capital, and TPG Capital about a potential investment of at least $1 billion in exchange for a minority stake of up to 30%.
In April, Nokia Siemens Networks reportedly changed its plans on renewed interest from buyout firms and was considering the sale of a controlling stake in the joint venture, which could be worth about $2 billion for a 51% stake.