No sign of an NSN buyer

Nokia Siemens Networks’ search for a willing buyer for a stake in the ailing JV appears to have staggered to a halt, with reports emerging that Nokia and Siemens have agreed to rather invest more of their own cash in an effort to revive the partnership’s fortunes. Reports in the Wall Street Journal suggest that plans to sell a controlling stake in the venture to a consortium including private equity investors were about to fall through, with Reuters quoting telecoms analyst Earl Lum as saying that “Any potential investor would need to see some light at the end of the tunnel with regard to profitability for NSN.”

When NSN was launched in 2007, the 50-50 partnership between Nokia and Siemens was projected to hit double-digit returns over the course of a six year partnership. To date, the JV has only posted two profitable quarters. As such, it is widely believed that the price tag is a little too rich for investors. Earlier this month, two private equity groups were said to have walked away from a potential deal after months of discussion came to a halt.

Although NSN is the second-largest manufacturer of wireless networking kit in the world,  the JV is reported to have lost in the region of $1bn last year. The venture has been flirting with prospective buyers since last year but it is widely believed that the partners disagree about pricing. Nokia’s difficulties are well known and Siemens, perceived to be on steadier ground financially, is reported by the WSJ to be interested in taking control of the JV. This may be a tall order, given that Nokia currently controls four of the seven board seats. This morning, Nokia offered the somewhat enigmatic statement to Reuters that there were “multiple options” for the JV.

Earlier this year, NSN had engaged in a battle of wits with the Chinese authorities over its $975m purchase of Motorola’s network infrastructure assets. The deal finally went ahead in May, following months of foot-dragging from the Chinese Anti-Monopoly Bureau, which was reluctant to approve it, thanks in no small part to objections from home-grown kit-maker Huawei. The increased presence of Chinese kit makers in the global market has put pressure on western players like NSN and Ericsson; as the likes of Huawei and ZTE make a strong play on price as a differentiator, their western counterparts have begun viewing services and managed offerings as a revenue stream in saturated markets such as Europe.

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