Nokia Siemens Networks is to lay off around 17,000 people as it reorganises its business ahead of a possible stock market flotation.
The layoffs, announced on Wednesday, will take place by the end of 2013 as part of a drive to slash costs by €1bn (£861m). Nokia Siemens Networks (NSN) said it will in future focus on mobile broadband networks and services, meaning several divisions will need to go.
"Our goal is to provide the world's most efficient mobile networks, the intelligence to maximise the value of those networks, and the services capability to make it all work seamlessly," NSN chief executive Rajeev Suri said in a statement. "Despite the need to restructure parts of our company, our commitment to research and development remains unchanged, with investment in mobile broadband expected to increase over the coming years."
According to the statement, business areas that are not in line with the new focus will have to be "divested or managed for value". An internal communication seen by Mobile Europe suggested that NSN may pull out of fixed-line VoIP, broadband access, WiMax, narrowband, carrier Ethernet, business support systems, and communications and entertainment products.
Nokia and Siemens created NSN as a joint venture in 2007. Now, the company is heading for an IPO, leading to reorganisation and cost-cutting as a way of making it more attractive to investors. In some of the areas destined for the chop, NSN has faced heavy competition from the likes of Huawei and Ericsson.
"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. "These planned reductions are regrettable but necessary, and it is our goal to make them in a fair and responsible way, providing the support we can to employees and communities."
Apart from the job cuts, NSN said it would reduce costs by targeting areas including real estate, IT, procurement costs, general expenses and "a significant reduction of suppliers".