Nokia Siemens Networks says restructuring ahead of plan

The 50-50 joint venture between Nokia Oyj and Siemens AG is in the middle of a cost-cutting plan, which includes laying off a quarter of its staff and selling product lines to focus on mobile broadband.

"It is on track. I would even say that we are some way ahead of our original plan in reducing our workforce," NSN Chief Executive Rajeev Suri told Reuters.

The company, formed by Nokia and Siemens in 2007, is struggling to make a profit amid fierce pricing competition from Chinese rivals and Sweden's Ericsson.

The restructuring should result in 1 billion euros in cost savings by the end of next year.

NSN, which made a profit of 27 million euros on a non-IFRS basis in the second quarter on sales of 3.3 billion, is not the only company in the sector going through a rough time.

Alcatel-Lucent is in the middle of cutting 5,000 jobs and is seeking cost savings of 1.25 billion euros to survive stiff competition and weak demand.

With the telecom equipment market shrinking as major operators cut spending in a faltering global economy, competition on prices has intensified.

Suri said the sector seemed to have stabilized after a weak first half. "We still think there will be no growth this year. We still think that will be a flat market in 2012," he said, declining to give any expectations for next year.

"Price pressure has a little bit eased," he said. "Overall, pricing is a little bit more stable."

Copyright Thomson Reuters 2012