In a statement issued shortly before 5pm AEST, the companies said the venture would incorporate the Networks Business Group of Finland mobile player Nokia and the carrier-related operations of German company Siemens AG.
The venture is expected to generate cost savings of 1.5 billion euros annually by 2010, with the initial 60,000 member workforce globally reduced by 6,000 to 9,000 employees over the next four years.
The combined company generated 15.8 billion euros in pro forma annual revenues based on the 2005 calendar year.
"Based on current market share data, it will be the second largest company in mobile infrastructure, second in services, third in fixed infrastructure and the third largest in the overall telecommunications infrastructure market," the two partners said.
The transaction is expected to close before 1 January 2007 subject to regulatory approvals and agreement on detailed implementation steps.
Simon Beresford-Wyllie, the present executive vice-president and general manager of networks at Nokia, is to take on the chief executive officer's position "immediately upon closing of the merger," the companies said.
Representatives for both Nokia and Siemens AG in Australia declined to comment.