Nokia, Siemens Mull Private-Equity Talks

Nokia(NOK) and Siemens(SI) are open to possible private-equity investment in Nokia Siemens Networks, their network equipment joint venture.

But neither partner is seeking an early exit, according to top executives at the Finnish mobile phone maker and German engineering group.

Both parents confirmed that talks were under way with private-equity companies interested in buying a stake in NSN, which has been a financial burden on the two groups for much of the three years of its existence.

In interviews with the Financial Times, executives pointed to signs of recovery in the business and insisted Nokia and Siemens were committed to completing the turnaround before considering their options after the joint venture ends in 2013.

The comments mark the first time either group has publicly acknowledged talks over a possible stake sale since interest from several U.S. buyout companies was first reported in July.

"We are always willing to talk to those who want to bring ideas and capital to the industry," said Timo Ihamuotila, Nokia's chief financial officer. "Nokia and Siemens will continue to be major shareholders of NSN in any likely scenario."

One person close to the situation said there was interest from "a handful" of potential investors in a deal that could be worth up to $1 billion and would raise the possibility of an eventual initial public offering.

The Financial Times reported last month that Blackstone (BX) and TPG were among those interested in NSN, while Silver Lake Partners and Bain Capital have also been linked. One person familiar with the talks said some but not all of those companies were still involved.

Joe Kaeser, Siemens' chief financial officer, said NSN had become "more attractive for potential investors" after recent cost-cutting and last month's $1.2 billion acquisition of Motorola's (MOT) network infrastructure business. He said private-equity investment in NSN "could be a good lever for its future business development".

Both owners stressed the private-equity interest was unsolicited and cautioned it was far from certain a deal would be reached.

NSN was set up in 2007 as a 50-50 venture that combined the network equipment arms of Nokia and Siemens to compete against rivals including Ericsson of Sweden.

The business lost €1.6 billion in 2009 amid rising low-cost competition from Huawei and ZTE of China and reduced spending by recession-hit mobile operators but the decline has slowed this year.

Rajeev Suri, NSN chief executive, said private-equity investment could give the business "greater strength and flexibility" but insisted fresh capital was not essential.

"We're not just looking for financial investment but also for new ideas," he said.

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