Nokia Siemens Networks (NSN), a 50-50 joint venture between
), announced that it has entered into an agreement with the
billing and charging software service provider Redknee Inc., to
divest the company's Business Support Service (BSS) division.
NSN is offloading its BSS unit for $52.2 million of which
$19.6 million will be received at the closing of the deal while
the company will get the remaining $32.6 million for certain
performances-based cash earn outs. The deal is expected to close
in the first half of 2013.
As part of the acquisition, Redknee will get Nokia-Siemens'
intellectual property assets as well as a strong list of over 200
customers spread across 90 countries. Additionally, Redknee will
also get NSN's 1,200 employees, who are mainly based in Germany,
India and Poland.
NSN has been going through tough times as sales have declined
mainly due to competition from low-cost Chinese manufacturers.
The company also lacked severely on the CDMA front, which is the
most dominant network used in the lucrative North American
To overcome this difficult situation, the company is reducing
its operating costs by retrenching employees and selling its
non-core business units. NSN plans to lay off 17,000 or 23% of
its work force and expects the restructuring to result in an
annual cost reduction of approximately $1.35 billion by 2013.
Excluding the BSS unit, the company has trimmed about 13,000
of its work force and has made six divestments this year, which
include offloading of its optical unit to Marlin equity partners
for an undisclosed amount.
Initially in Aug 2012, NSN put up its BSS unit for sale, which
received attention from several potential bidders including
) and some private equity firms. However, in Dec 5, 2012, Redknee
agreed to acquire the BSS division for $52.2 million.
The deal will not only allow Redknee to get access to tier 1
telecom carriers but will also enhance its portfolio of support
service for its customers. NSN on the other hand will be able to
concentrate on its core mobile broadband business, which remains
the prime focus of the company as carriers around the world
continue to amend their network infrastructure.
Both Nokia and Siemens currently carry a Zacks Rank# 3
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