Siemens, Nokia plan merger in equipment businesses

Nokia of Finland and Siemens of Germany are expected to announce today that they will merge their telecommunication network equipment businesses in a deal valued at more than $30 billion, people involved in the transaction said Sunday night.

The merger is likely to set off a new global wave of consolidation and a round of price wars as the telecommunications industry remakes itself after the past decade's boom-bust cycle.

The cross-border deal, which was approved by the boards of both companies, would 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 likely to put pressure on Motorola, which will fall to No. 4 network equipment maker, just as its business is turning around as a result of its hot-selling Razr cell phones.

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 such as Cingular and Verizon. While Nokia's cell phone 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.

The deal involves creating a new company that both Nokia and Siemens will merge their network equipment businesses into, the people involved in the transaction said. It is being structured somewhat like a joint venture because both companies will own the business, they said.

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