Nokia Siemens Networks' (NSN) services unit faces closure as an
essential contract with Deutsche Telekom will not be extended, two
people familiar with the matter said on Tuesday.
One person said the closure, effective en 2013 would be announced on Wednesday during a workers' meeting in Kassel.
Services, which generates under 100 million euros in annual sales and
employs about 1,000 people, ensures that calls and data are transmitted
via overhead cable networks. Deutsche Telekom sold the unit to NSN five
At the time the two companies agreed on a 5-year 300
million euro services contract. The unit also counts Vodafone as a
The contract would not be extended, the person said.
German daily newspaper Sueddeutsche Zeitung first reported about the closure of the unit.
union representative Mike Doeding said that a meeting to update workers
about next year's plans was scheduled for Wednesday, adding he had no
idea about the message to be expected.
"If they are to close the unit it would be an outrage," Doeding said.
NSN declined to comment, while Deutsche Telekom referred to NSN for comment.
a 50-50 joint venture between Nokia Oyj and Siemens AG, is cutting
costs and plans to shed a quarter of its staff and sell product lines to
focus on mobile broadband. NSN had 60,600 employees at the end of the
The telecoms equipment market is going through
rough times with stiff competition from Chinese peers Huawei and ZTE as
the major telecoms operators postpone investments, faced with shrinking
markets due to the weak economy.
France's Alcatel-Lucent is also cutting costs.
Monday, NSN said it was selling its optical fibre unit to Marlin Equity
Partners, resulting in the transfer of up to 1,900 employees, mainly in
Germany and Portugal.
© Thomson Reuters 2012