Nokia Siemens Sells Fiber Unit To Marlin

Mobile telecom equipment joint venture Nokia Siemens Networks, which is focusing on its core business, is to sell its optical fiber unit to Marlin Equity Partners for an undisclosed sum, sister news service Reuters reported. Up to 1,900 employees, mainly in Germany and Portugal, will be transferred to the new company, Nokia Siemens said.

The company, owned by European tech giants Nokia and Siemens, has sold a number of product lines since it last year announced plans to divest non-core assets and cut 17,000 jobs, nearly a quarter of its total workforce. Nordea Markets analyst Sami Sarkamies said he expected more divestments after the optical unit deal.

This disposal was a small surprise, he said, because Nokia Siemens needed some optical technology—where data is transmitted by pulses of light—for its main mobile broadband business. The move may hint the company is preparing itself for further consolidation in the sector by cutting overlaps with other players, Sarkamies said.

Next, Nokia Siemens Networks’ German services unit faces closure and 1,000 jobs are at risk as Nokia and Siemens shake up the joint venture, two sources said. The joint venture is cutting costs and plans to shed a quarter of its staff and sell product lines to focus on mobile broadband. The program is expected to yield about €1 billion ($1.31 billion) in cost savings by the end of next year.

The telecom equipment market is going through tough times with stiff competition from Chinese rivals Huawei and ZTE as the major telecom operators postpone investments, faced with shrinking markets due to the weak economy. France’s Alcatel-Lucent has also said it will cut costs and jobs to survive stiff competition and weak demand.

NSN Services Gmbh, which generates under €100 million in annual sales and employs about 1,000 people, provides network operations and management services and also includes Vodafone among its customers. Deutsche Telekom sold the unit to Nokia Siemens five years ago, when the two companies also agreed on a €300 million services contract that now will not be renewed, according to the sources.

Nokia Siemens, which declined to comment, has said such services, often provided on older overhead cable networks, are not considered core operations, and it exited a similar business in Brazil earlier this year. Verdi union representative Mike Doeding said that a meeting to update workers about next year’s plans was scheduled for Wednesday, adding he had no idea about what message to expect from management. “If they are to close the unit it would be an outrage,” Doeding said.

The telecom equipment market is going through rough times with stiff competition. French Alcatel-Lucent is also cutting costs.

Harro ten Wold is a correspondent for Reuters in Frankfurt; additional reporting by Maria Sheahan, Tarmo Virki and Terhi Kinnunen.