Nokia Siemens to cut 17,000 jobs
Source: Daniel Thomas
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Nokia Siemens Networks is to cut 17,000 jobs worldwide as part of an extensive global restructuring aimed at focusing the struggling telecoms equipment maker on more profitable mobile broadband business.
The company, which is jointly owned by Nokia and Siemens, said that about a quarter of its 74,000 staff would be cut as it sought to improve profitability by reducing operating expenses and overheads by €1bn by the end of 2013.
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Nokia and Siemens have already been forced to inject €1bn into the joint venture in the summer after attempts to sell to a private equity group failed and are expected to take similar charges in order to restructure the business in 2012, although the exact amount has not yet been made clear.
NSN is operating in a difficult network equipment market in Europe in particular, where companies are delaying the adoption of infrastructure upgrades owing to the poor economic outlook in a capital-intensive market where margins are already under pressure.
European companies such as NSN, as well as Alcatel Lucent, its French rival that has also undergone extensive restructuring, have also been challenged in home markets by Chinese equipment makers led by Huawei, which is winning important contracts in the region.
Much of the work in European markets has centred on upgrading wireless projects for the provision of greater data over networks, which helped underpin recent results at rival Ericsson.
This shift in business reflects NSN’s decision to refocus its own business on mobile broadband network infrastructure and services. Other parts of its business, such as its smaller fixed line business, will be reviewed ahead of a potential sale or closure, or be managed for value and eventual closure. It has committed to continued research and development in technology, and will increase investment in mobile broadband over the coming years.
Rajeev Suri, chief executive, said on Wednesday: “We believe that the future of our industry is in mobile broadband and services �C 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 aims to reduce its annualised operating expenses and production overheads by €1bn by the end of 2013. The savings are expected to come mainly from organisational streamlining, as well as areas such as real estate, information technology, product and service procurement costs, general and administrative expenses, and a significant reduction of suppliers.
The planned reductions in staffing are expected to be driven by aligning the workforce with its new strategy, as well as through a range of productivity and efficiency measures. NSN has not given details about which countries and teams will be most affected.
Mr Suri said that the staff cuts were “regrettable but necessary”.
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