Strategic merger of telecom networking services


The merger of telecom network businesses by Nokia and Siemens, though significant globally, is unlikely to have a major impact in India. Indian operations can be a perfect strategic fit.

Industry watchers say Nokia, Ericsson and Motorola are already market leaders as far as the GSM network is concerned having bagged most of the equipment supply orders from the private sector players, which serve nearly 60 million GSM mobile subscribers in India. Where CDMA is concerned, it is Lucent, which recently merged with AIcatel that leads the way.

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Nokia officials declined to comment on the India impact of the merger.

While Nokia may see one less competitor for customers, it is Siemens which will be the bigger beneficiary given its relatively small play in the network infrastructure business. Siemens, which is strong on the engineering side, will also benefit because of Nokia’s high quality staffing.

In India siemens will benefit since it has had limited success and Nokia has been making inroads in wireless infrastructure business. This is in the short term. In the long term, Nokia gets access to Siemens’ fixed infrastructure offerings, as Indian operators move towards next generation network required for a host of high value broadband services like internet protocol (IPTV), interactive services, distance education and telemedicine.

But for the customer, the deal will not translate into much. At the operators end though, some relief is expected. they will have to deal with less number of people and be conversant with less number of GSM networks. That means they can bring down their manpower said the CEO of Idea Cellular.

Most telecom players have to deal with multiple vendors. And this means that they not only have to transact with many people, but also understand how each one’s network, including the switch and cell sites, work.

Post merger, it is believed that both Nokia and Siemens would integrate their network. The likely synergies, both in terms of technology and costs, are expected to be passed on to the country’s telecom operators.

To summarize, Siemens is known to be very strong in the fixed line technology (switch and other solutions), while wireless connectivity is Nokia’s strength. So, when they come together, telecom operators can expect best of breed solutions in both areas from a single entity. They are planning as to how they can deliver more value to the customer. But they have not given any indication of reduction in prices any further.