European Commission OKs Nokia Siemens

The European Commission today approved the proposed networks joint venture between Nokia and Siemens, clearing the final major regulatory hurdle to creating the second largest network infrastructure in the world.

The Commission today issued a statement saying the tie-up would not significantly impede competition in the network infrastructure market despite giving the venture a 25% market share in the global mobile equipment market behind Ericsson and a dominating position in the wireline equipment space. The venture has now gained approval from U.S. and European regulatory bodies, the two primary potential obstacles to the merger. While the companies are still waiting on final decisions from some smaller countries, Nokia and Siemens officials said they expected those approvals to follow quickly in light of the European Commission’s decision.

The two companies said they plan to close the deal by the end of the year and begin operating the venture buy early 2007. Nokia’s handset divisions and Siemens enterprise divisions will not be part of the venture, but the two companies combined infrastructure business took in EURO 15 billion last year, led by Nokia’s sales of GSM and UMTS equipment and Siemens wireline, VoIP and IPTV gear.

While the venture will be 50-50 owned by the two parents, Nokia is dominating the leadership of the company. Nokia President and CEO Olli-Pekka Kallasvuo will serve double duty as chairman of the new company, while Nokia’s current head of Networks, Simon Beresford-Wylie, will become CEO. Nokia senior vice president and core networks general manager Mika Vehviläinen will become chief operating officer of the venture.

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