Nokia and Siemens invest 1bn euros in joint venture

Written by The Financial Times | Updated: Sep 30 2011, 08:44am hrs
By Mark Wembridge in London and Chris Bryant in Frankfurt and Clare MacCarthy in Copenhagen

Nokia and Siemens, the German engineering conglomerate, said they would provide a total of 1bn euros in new capital and appoint a new executive chairman to their troubled telecoms equipment joint-venture.

Nokia and Siemens are each providing 500m euros to further strengthen the companys financial position and set the stage for strategic flexibility, productivity and innovation in areas such as mobile broadband and related services.

At the same time, the companies announced that Jesper Ovesen, former chief financial officer at TDC, the Danish telecoms group, will be responsible for overseeing strategy at Nokia Siemens Networks, which is being restructured after talks to sell a stake to private equity groups failed over the summer.

Olli-Pekka Kallasvuo, who resigned as chief executive of Nokia last year and until now served as non-executive chairman of NSN, is stepping down from that position having failed to stem a succession of losses at the telecoms equipment maker.

Though relatively unknown outside his native Denmark, Mr Ovesens appointment was hailed as promising by analysts on Thursday.

Its a wise choice, he has the right skills set for the task, said John Strand, of Strand Consult, a telecoms research agency.

With a background in accounting, a career as chief financial officer in Danish blue chip companies including Danske Bank, Lego and TDC, his experience encompasses financing as well

as technology.

Competition in the capital-intensive and low-margin network equipment industry has become fiercer during the global economic crisis as Nokia Siemens Networks, Ericsson of Sweden and Chinas Huawei battle for market share.

Huaweis big advantage is that it can provide infrastructure and financing in a single package, said Mr Strand. The appointment of Mr Ovesen, he added, was a very strong signal that NSN will increase its focus on project finance in order to address the Chinese challenge more directly.

The Financial Times Limited 2011