Tuesday, June 27, 2006

Pyramid Research: Nokia Siemens Networks to Make an Impact as the 3rd Largest Carrier Network Infrastructure Vendor

According to Pyramid Research, the "Nokia (NOK) and Siemens (SI) merger would make Nokia Siemens Networks the 3rd largest carrier network infrastructure vendor after Ericsson-Marconi and Alcatel/Lucent with combined sales of $15.8bn euros (US$19.75bn) and a headcount of about 60,000."

Sergio Cruz at Pyramid Research said, “For Nokia, organic growth to reach the level of scale shown by the major players was not feasible because it would take too much time, so acquisition was the solution."

Pyramid Research points out the consolidation taking place in the carrier network infrastructure industry as well as among the network operators and states that "the new Nokia Siemens Networks will have greater purchasing power and with platform commonality, equipment costs could be reduced by 45% according to the new company’s sources, allowing it to compete in this new environment."

Cruz concluded, "We expect further consolidation to take place because the ‘operating point’ of the industry has changed. The sale of telecommunications equipment is a game of economies of scale and scope. As operators consolidate their fixed and mobile operations, vendors must increase their size to better negotiate contracts.”