Nokia and Siemens have agreed to combine their telecom equipment units in a deal creating one of the biggest players in the industry, the companies said today.
They said the businesses to be combined in the 50-50 joint venture called Nokia Siemens Networks had sales of €15.8 billion ($20 billion) last year.
German industrial conglomerate Siemens declined to comment on financial details of the deal, which the Wall Street Journalhas reported is worth $31.6 billion.
The deal will put the new company in the same league as current industry leader Cisco Systems and the newly merged Alcatel-Lucent in terms of sales, and it will offer savings as they take on fierce competition.
Nokia Siemens Networks will have its headquarters in Nokia's home country of Finland and be headed by Simon Beresford-Wylie, currently in charge of Nokia's networks division. It will also have a regional headquarters in Siemens' home city of Munich.
Nokia and Siemens said they expected to cut 10 to 15 per cent of the combined businesses' 60,000 staff over the next four years.
The tie-up of Alcatel and Lucent announced in April sparked talk of more possible mergers and partnerships between infrastructure equipment makers, who have come under increasing pressure from Asian rivals like Huawei.