Aiming to cut costs and focus on core mobile broadband business, the mobile telecom equipment joint venture, Nokia Siemens Networks has announced plans to sell its optical network unit to private investment firm Marlin Equity Partners for an undisclosed sum.
However, in an e-mailed statement to Bloomberg Businessweek, Robert Jakobsen, a Jyske Bank A/S analyst in Silkeborg, Denmark, wrote, “The deal may be worth 200 million euros ($261 million), depending on the value of patents included.”
Nokia Siemens chief executive officer, Rajeev Suri indicated that the company’s strategic focus is on core markets with an emphasis on areas such as LTE.
The deal with Los Angeles, Calif.-based Marlin Equity will probably close in the first quarter of 2013. Marlin will provide the funds needed to strengthen its leadership position.
Based on Nokia Siemens announcement on Monday, up to 1,900 employees, mainly in Germany and Portugal, will be transferred to the new company.
Since last year, when Nokia announced plans to divest non-core assets and cut 17,000 jobs or nearly a quarter of its total workforce, the company sold a number of product lines. In fact, Nordea Markets analyst Sami Sarkamies said he expects more divestments after the latest optical unit deal.
However, according to Sarkamies, this disposal was a small surprise, because Nokia Siemens Networks needed some optical technology for its main mobile broadband business.
Furthermore, Sarkamies stated, “The move may hint the company is preparing itself for further consolidation in the sector by cutting overlaps with other players.”
Commenting on this deal, Dana Cooperson, leader of Ovum’s Network Infrastructure Telecoms practice, said, “The details of the transaction were not released, so it is difficult to gauge Marlin’s commitment to turning the optical business around. Competition in the market is keen; margins are under constant pressure. Competitors will take advantage of this ownership change and related confusion to gain any advantage in NSN’s accounts. Marlin’s goal may be to sell the optical business to another vendor, for example Juniper Networks.”
Edited by Brooke Neuman