Nokia Siemens Networks (NSN) has announced a new strategy focusing on mobile broadband and services along with an extensive global restructuring program, which will see up to 17,000 jobs go.
Nokia Siemens Networks CEO Rajeev Suri said: ‘We believe that the future of our industry is in mobile broadband and services – and we aim to be an undisputed leader in these areas. At the same time, we need to take the necessary steps to maintain long-term competitiveness and improve profitability in a challenging telecommunications market.’
NSN will target end-to-end mobile network infrastructure and services, with a particular emphasis on mobile broadband. The company’s Services organisation will further strengthen its global delivery system.
The company will also divest itself of business areas that are no longer core to its new strategy. One such area is the company’s WiMAX assets, which it acquired following its purchase of Motorola’s 4G business earlier this year. NSN announced on Tuesday 29 November that the WiMAX assets will be sold to NewNet. NSN will, however, hold on to Motorola’s TD-LTE assets.
NSN’s target is to reduce its non-IFRS annualised operating expenses and production overheads by €1bn by the end of 2013, compared with the end of 2011. While these savings are expected to come largely from organisational streamlining, the company will also target areas such as real estate, information technology, product and service procurement costs, overall general and administrative expenses, and a significant reduction of suppliers in order to further lower costs and improve quality.
Nokia Siemens Networks also plans to reduce its global workforce by approximately 17,000 by the end of 2013. The company said it will begin the process of engaging with employee representatives in accordance with country-specific legal requirements to find socially responsible means to address these reduction needs.
Commenting on the WiMAX sell off, Daryl Schoolar, principal analyst, infrastructure at analyst Ovum, said: ‘Prior to the Motorola acquisition NSN had already shut down its own in house WiMAX operations. Considering mobile operators’ rapidly diminishing interest in WiMAX, the technology no longer fits within the company’s long-term vision. The only synergy between WiMAX and NSN’s other mobile network assets is TD-LTE. This is an opportunity that NSN can still act on.’
Schoolar said that retaining the TD-LTE assets gives NSN a chance to capitalise on helping mobile operators such as Clearwire in the USA (an NSN WiMAX operator) switch to a TD-LTE system.
He speculated on what this means for NewNet. ‘While WiMAX’s growth outlook seems limited, there are still revenue opportunities. In areas without a fixed broadband system, operators are still open to WiMAX. NewNet should also find success with devices as this was part of its deal with NSN. While opportunities for building new WiMAX networks appear limited, existing networks still have a need for subscriber devices, which NewNet can now fulfill.’
Schoolar added: ‘NewNet can also use its new infrastructure gear to pursue opportunities in vertical applications like security. But, it is when WiMAX operators’ discussions turn to TD-LTE that NewNet will find itself lacking. Hopefully for the company it can either develop its own TD-LTE solution or find a way to work with a partner – perhaps NSN.’