As a part of its cost cutting initiative, Nokia Siemens Networks – a 50-50 joint venture between Nokia Corporation (NOK) and Siemens AG (SI) – has sold some of its internet protocol television (IPTV) assets to global consulting and outsourcing group Accenture Plc (ACN). The deal value was not disclosed.
IPTV transmits and broadcasts television and multimedia content using the internet protocol technology. It generally helps subscribers watch their favorite TV programs, video on demand (VOD) services on their tablets or smartphones, as well as catch up the television shows later in their personal computers.
Integrating Nokia-Siemens’ IPTV assets with Accenture’s over-the-top TV software will help the Dublin-based company offer video services at a lower cost. Nokia-Siemens is already in talks with Belgium’s largest telecommunication company Belgacom to sell several IPTV assets as well as transferring twenty five employees to them. This marks the end of Nokia Siemens’ IPTV business and it is expected that seventeen employees of the company would join Accenture after the acquisition.
For some time now Nokia has been having a tough ride in almost all fronts. Despite teaming up with Microsoft Corporation (MSFT) to develop windows based smartphones, Nokia is still far behind its rival Apple Inc.’s(AAPL) iPhone, and an array of other smartphone manufacturers using Google Inc.’s (GOOG) Android platform. Even its mobile equipment manufacturing arm Nokia-Siemens has been subjected to a huge cash loss.
In an attempt to overcome this difficult situation and to concentrate on its mobile broadband business, the company is reducing its operating cost by retrenching employees and selling its non-core business units. The company is in its final lap of negotiations with Ericsson (ERIC), Amdocs ltd (DOX) and some private equity firms to sell its Business Support Service (BSS) unit.
We believe selling IPTV assets is the right strategy for Nokia-Siemens as it will help the company monetize its huge portfolio of patents and minimize its mounting losses.
We maintain our long-term Neutral recommendation on Nokia. Currently, Nokia also retains a Zacks #3 Rank, implying a short-term hold rating.
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