MUNICH/HELSINKI.- Nokia and Siemens are tied in their telecom equipment joint venture until 2013, industry sources said on Thursday, countering speculation Siemens may be looking for an exit.
German union IG Metall said earlier this week it expects Siemens to get rid of its 50 percent stake as Peter Loescher, the new chief executive, has taken on a critical review of assets of the German conglomerate, wanting to get rid on non-core ventures.
But the six-year contractual tie-up on the venture, which started in April 2007, undercuts talk that Siemens could bail out from Nokia Siemens Networks in the near future, forcing Nokia to team up with an unwanted partner or to spend up to 10 billion euros ($14 billion) to purchase Siemens’ stake.
Sources said any early exit can be done only through mutual consent. “Partners can get out earlier, if they find a common agreement,” said one.
German press and stock market speculation that Siemens would exit the venture grew in recent days after union officials said Nokia Siemens would probably be the first among several joint ventures Siemens is likely to pull out of.
But the sources said Nokia Chief Financial Officer Rick Simonson had said on a conference call in August 2007 the companies are in a six year deal, without revealing any further details.
His comments may have passed many analysts by since recent research notes make no mention of a six-year lockup, while discussing the chances of Siemens exiting.
Nokia and Siemens declined to comment.
Nokia and Siemens agreed in June 2006 to set up the 50:50 joint venture, which analysts’ valued at up to 25 billion euros ($35.2 billion) at the time, to get benefits of scale in a fiercely competed market for telecom networks.
Helsinki-based analysts said they saw any quick dissolution of the deal as unlikely, since the venture is in the midst of heavy restructuring, adding the price of Siemens’ half should be now clearly less than what it was when the venture was set up.
This year the venture has been writing down assets and cutting staff to reach a targeted 1.5 billion euro annual savings by the end of next year.
Nokia has manned the top executive positions of the venture and holds a majority on the board of NSN.