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12 December 2011
 
Nokia Siemens Networks plans to shed 17,000 employees -- nearly one quarter of its workforce -- as part of a massive reorganization that will see the company’s focus shift to mobile broadband.
 
The company, which is jointly owned by Finnish phone giant Nokia and German electronics firm Siemens, hopes that the restructuring will reduce annual operating expenses by €1 billion by the end of 2013 compared to the end of 2011.
 
"We believe that the future of our industry is in mobile broadband and services – and we aim to be an undisputed leader in these areas," said Rajeev Suri, chief executive officer of Nokia Siemens Networks. "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 plans to retain the products it needs to build the complete mobile broadband network. That does include the optical transport portfolio, which will become a business unit under the mobile broadband business.  Any products outside the core area will be sold off or put into maintenance mode.
 
At the time of writing, the company has already sold its microwave backhaul unit to DragonWave. It has also agreed deals to sell its WiMax business to NewNet Communication Technologies and its fixed-line broadband business to ADTRAN.
 
An internal company email that was shown to Mobile Europe identified product lines that were in the "exit or maintain" category, which included: "perfect voice (fixed-line VoIP), broadband access, WiMAX, narrowband, carrier Ethernet, business support systems (BSS), and communications and entertainment solutions (CES)".
 
Analyst firm Ovum says NSN’s move reflects wider structural changes in the telecoms industry, and notes that we may see similar announcements from other telecoms infrastructure companies.
 
"In making the announcement, CEO Rajeev Suri stated that margins in the infrastructure business have fallen dramatically since the turn of the century. He highlighted increasing competition and the burden of R&D expenditure (NSN spent €2bn on R&D in 2010) as key factors in the decision, and said that it is no longer possible to be all things to all players," Ovum analysts Daryl Schoolar and Mark Giles wrote in a research note.
 
The analyst firm anticipates that only between three and five companies will succeed at being full-service global infrastructure vendors in the longer term. Others will be forced to specialise – as NSN is doing.
 
By Pauline Rigby