The 50-50 joint venture announced in June between the telecom equipment divisions of Nokia and Siemens is facing a delay following the recent raiding of Siemens' offices related to a corruption investigation. Instead of the deal closing by Jan. 1, it is now expected to close in Q1'07. According to a short statement published on Nokia's website, the two firms "... intend to adjust their agreements in order to have Siemens conduct an appropriate compliance review prior to closing of the transaction." Reports and estimates vary, but the JV would become the second, or third largest telecom equipment supplier with annual revenue between $21b-$23b. The JV has already received U.S. and E.U. antitrust approvals. Although a Gartner analyst commented Nokia could walk away from the deal without penalty, it does not seem to be in its best interest, since it needs the scale to compete in a highly concentrated industry. An analyst from Info-Tech Research points out not only the lost revenue from the delay, but also the negative implications for potential clients.
• Sources: Press release, Light Reading, Reuters, The Wall Street Journal
• Related commentary: Nokia: Expect Just 10% Handset Unit Growth, Narrower Operating Margins, China's Eventual 3G Rollout Could Favor EU Vendors, More Consolidation in Telecom Equipment, Nokia and Siemens Announce $31.6B Deal
• Potentially impacted stocks and ETFs: Nokia (NOK), Siemens (SI). Competitors: Alcatel-Lucent (ALU), LM Ericsson Telephone (ERIC)
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