Phone firm slashes jobs to save cash

Struggling Nokia Siemens Networks is cutting 7,000 jobs, or 23 percent of its workforce, to save about 1bn euros (£863m) a year.

The Finnish group Nokia and German conglomerate Siemens will now focus on mobile broadband gear and services.

Nokia Siemens Networks has struggled for profitability since it was formed in 2007 because of tight spending by operators and fierce competition from rivals Huawei and Ericsson.

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In the third quarter, the venture made an underlying operating profit of 6m euros on sales of 3.41bn.

“This is a big move. I believe the goal is an IPO,” said Swedbank analyst Jari Honko. “That cannot be done with the current structure and operation models.”

The venture raised 1bn euros to finance the restructuring in late September from its parents, which both put in an additional 500m.

Nokia Siemens chief executive Rajeev Suri said they would not need any further financing at this stage.

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The parent companies have said they want to make the venture more independent, seeing a listing as one of its options within a few years.

“As we look towards the prospect of an independent future, we need to take action now to improve our profitability and cash generation,” Suri said in a statement.

As its business focus shifts to mobile broadband, the company will exit several smaller businesses mostly related to fixed line telecommunications.