Nokia, Siemens speed-dial $30 bn deal

The cross-border deal, which was approved by the boards of both companies, will create the world’s third-largest network equipment concern behind Ericsson and a combined Lucent and Alcatel, which announced plans to merge three months ago. The transaction is also likely to put considerable pressure on Motorola, which will fall to the No. 4 position among network equipment makers in the world, just as its business is turning around as a result of its hot-selling Razr cellphones.

The network equipment industry makes the fiber optic cables, routers and wireless beacons that act as the backbone of the communications world for telecommunications carriers like Cingular and Verizon. While Nokia’s cellphone business will remain largely unaffected as a result of the deal, it could use the combination to provide network equipment to carriers that includes advanced features for its phones.

Motorola has been able to couple its network equipment for Nextel, which is now part of Sprint, with technology for its walkie-talkie handsets with much success.

The combination of Nokia and Siemens is being driven, in part, by the fact that so many of the world’s biggest carriers—the clients of the equipment makers—are merging themselves, as AT&T’s has by acquiring BellSouth and Sprint has in a deal with Nextel.

The deal is also being spurred by growing competition from emerging rivals in Asia, which are increasingly finding ways to deploy new technologies while lowering costs. The deal involves creating a new company into which both Nokia and Siemens will merge their network equipment businesses, people involved in the transaction said. It is being structured somewhat like a joint venture because both companies will own the business, they said.

ANDREW ROSS SORKIN