Nokia Siemens Networks has said it will in future focus on mobile broadband and services, as it cuts 13,000 jobs and €1 billion from operating expenses, to prepare the company for the prospect of an independent future.
Key points:
- Focus to move to mobile broadband and services:
- 17,000 jobs to go by 2013
- operating expenses and production overheads reduced by €1 billion by the end of 2013
- savings to come from “elimination of the company’s matrix organizational structure, site consolidation, transfer of activities to global delivery centers, consolidation of certain central functions, cost synergies from the integration of Motorola’s wireless assets, efficiencies in service operations, and company-wide process simplification
- CEO Suri says action needed to prepare for “prospect of an independent future”
Full statement from Nokia Siemens Networks reproduced below:
Nokia Siemens Networks today announced its strategy to focus on mobile broadband and services and the launch of an extensive global restructuring program.
“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.”
Strategy update Nokia Siemens Networks will target end-to-end mobile network infrastructure and services, with a particular emphasis on mobile broadband.
“Our goal is to provide the world’s most efficient mobile networks, the intelligence to maximize the value of those networks, and the services capability to make it all work seamlessly,” said Suri. “Despite the need to restructure parts of our company, our commitment to research and development remains unchanged, with investment in mobile broadband expected to increase over the coming years.”
Nokia Siemens Networks plans to realign its business to focus on mobile broadband (including optical), customer experience management and services. The company’s Services organization will further strengthen its highly-efficient global delivery system. Business areas not consistent with the new strategy are planned to be divested or managed for value. Quality and innovation will continue to be priorities for the company, with ongoing investment in both areas.
Restructuring program
Nokia Siemens Networks targets to reduce its non-IFRS annualized operating expenses and production overheads by EUR 1 billion by the end of 2013, compared to the end of 2011. While these savings are expected to come largely from organizational streamlining, the company will also target areas such as real estate, information technology, product and service procurement costs, overall general and administrative expenses, and a significant reduction of suppliers in order to further lower costs and improve quality.
Nokia Siemens Networks plans to reduce its global workforce by approximately 17,000 by the end of 2013. These planned reductions are expected to be driven by aligning the company’s workforce with its new strategy as well as through a range of productivity and efficiency measures. These planned measures are expected to include elimination of the company’s matrix organizational structure, site consolidation, transfer of activities to global delivery centers, consolidation of certain central functions, cost synergies from the integration of Motorola’s wireless assets, efficiencies in service operations, and company-wide process simplification.
Nokia Siemens Networks will begin the process of engaging with employee representatives in accordance with country-specific legal requirements to find socially responsible means to address these reduction needs. More information will be shared in impacted countries as the process proceeds. In order to reduce the impact of the planned reductions, Nokia Siemens Networks intends to launch locally led programs at the most affected sites to provide re-training and re-employment support.
“As we look towards the prospect of an independent future, we need to take action now to improve our profitability and cash generation,” said Suri. “These planned reductions are regrettable but necessary – and it is our goal to make them in a fair and responsible way, providing the support we can to employees and communities.