Nokia Siemens Networks to cut 17,000 jobs worldwide; most of the reductions will take place outside of Finland
Costs will be cut by EUR one billion by end of 2013
According to information obtained by Helsingin Sanomat, Nokia Siemens Networks, a leading global enabler of telecommunications services which has long struggled with economic difficulties, plans to cut just under a thousand jobs in Finland.
On Wednesday the company announced that it would reduce its global workforce by approximately 17,000 by the end of 2013. This is almost a quarter of the company’s entire staff complement. Nokia Siemens Networks did not specify which geographic regions the reductions would mainly be targeting.
Rajeev Suri, the Chief Executive Officer of Nokia Siemens Networks, refused to comment on the information received by Helsingin Sanomat about the job cuts in Finland.
According to a Nokia Siemens Networks press release, the company plans to “reduce its non-IFRS annualized operating expenses and production overheads by EUR one billion by the end of 2013, compared to the end of 2011.”
Jobs will be cut in stages in the next two years, with the company focusing in its business on mobile broadband, customer experience management, and services.
In recent years data transfer in mobile networks has increased significantly thanks to the wireless modems that today’s smartphones and computers are equipped with.
The company has been working on its new strategy since the end of September, when Dane Jesper Ovesen was appointed the Executive Chairman of the Board of Nokia Siemens Networks.
According to Suri, jobs will be reduced especially from the fixed network side, a business that the company plans gradually to bow out of.
“Of the companies in this field, we are the only one to focus on mobile broadband and services. Our large competitors are involved in fixed network equipment, multimedia, and applications. Many of our customers have said that in the development of the mobile broadband technology we are ahead of our competitors”, Suri says.
In the development of the wireless broadband technology, Finland holds a key position in the company’s operations. Therefore, relatively speaking, more jobs will be cut in other countries.
The company’s only Finnish factory is in Oulu, where base stations are manufactured.
“Even in the future we will continue to be a large European employer with plenty of activities in Germany and Finland. The Finns are pragmatic people and I believe they will understand the job reductions called for by our new strategy. I met some workers in Espoo and they seem to understand the issue”, Suri says.
With the new strategy, Nokia Siemens Networks aims to become a company that does not depend on funding from the owners.
“The independence means that we will fund our own business operations and that we will have good cash flow and profitability as the leading company in the field.”
Investment bank Nomura analyst Stuart Jeffrey is of the opinion that the change in strategy and the cutting of expenses speak of the fact that the company is being prepared to be sold.
That said, Jeffrey does not consider the selling of Nokia Siemens Networks likely before the cash flow has turned clearly positive.
According to Jeffrey, the owners may have to invest another two billion euros in the company.
At the end of September Nokia and Siemens both invested EUR 500 million in the joint venture, after negotiations with capital investors failed to produce the desired outcome.
According to Prime Minister Jyri Katainen (Nat. Coalition Party), in large structural changes the Finnish government can cooperate with the company and search for possibilities for new business operations.
“I am under the impression that in the operations of Nokia Siemens Networks, Finland will continue as the developer country of the company’s mobile network business. In this respect the operations will remain strong and they may possibly even be strengthened”, Katainen told Parliament on Wednesday.
“Now the question is: which country in Europe and in the world is the one that can continuously produce new innovations and create new possibilities”, Katainen added.
In the network equipment market, company restructurings are a commonplace. Because of the severe price competition the plight of small manufacturers has worsened.
In the summer of 2006 Nokia and Siemens announced that they would combine their network businesses in order to keep the operation viable.
Since then the joint company’s performance targets have been lowered several times.
The French Alcatel-Lucent, which is also a joint venture, has similar problems.
The increased likelihood of a recession in Europe may cause the teleoperators to reduce their investments in network equipment.
This would lead to further difficulties for the manufacturers.
Previously in HS International Edition:
Nokia Siemens Networks CEO predicts decline in number of networks companies (7.1.2011)
Nokia Siemens Networks to cut 450 jobs in Finland (5.2.2010)
Nokia Siemens Networks to close Espoo factory and cut 560 jobs in Finland (11.2.2009)
Nokia Siemens Networks press release, 23.11.2011