Tue, 27 Feb 2007
From: The Jakarta Post
By Ika Krismantari, The Jakarta Post, Barcelona
Following market liberalization and reform in the international telecommunications industry, Nokia and Siemens announced plans to join forces in a 50:50 joint venture under the banner of Nokia Siemens Networks (NSN), during the recent 3GSM (Global System for Mobiles) World Congress in Barcelona.

Boasting a combined 600 service customers in 150 countries, the merger is hoped to create a industry leader capable of meeting the needs of customers in the converging telecommunications industry by offering an end-to-end solution that focuses on broadband internet communication services.

With a vision of five billion people connected and "always on" by 2015, NSN, which will be officially established next April, estimates that three billion mobile subscribers will be reached by its services in 2007 and four billion in 2010, of which 80 percent will come from countries with a large lower-income population.

The Jakarta Post, together with a group of journalists from the Asia-Pacific region, spoke with NSN's head of radio access, Ari Lehtoranta, in Barcelona, about the merger and how it will affect the industry at a regional level, especially in Indonesia.

How do you see the 3G (third generation) market in Indonesia, and how will this planned merger effect the industry?

WCDMA (Wideband Code Division Multiple Access), one of the applications derived from 3G-based technology, is one of the good markets and I think you (Indonesia) have done very well.

Take for example, India, which had been quite a frustrating market for so many years, but look at it now, so everything takes a little bit of time.

The other example is Thailand, where one of the best selling phone we have there are 3G phones, and there is not even a 3G network there. Therefore, Thailand will be a very good market when the operators switch on to 3G because there will be millions of subscribers who will use the service.

In Indonesia, we are one step stronger than we were before. We are doing exactly that well in Indonesia because we believe we have better service capabilities.

We have a new product portfolio to offer. We will be stronger.

I have met some customers from that market, the message of our portfolio plan that we announced has been very positive.

Siemens has been a market leader in the network business in Indonesia, controlling about 40 percent of the market share, while Nokia has been a dominant player in the mobile phone business. How will you place yourself in Indonesia with this merger?

We are well positioned in Indonesia on the infrastructure side, as well as in the mobile side. (The merger) gives us a strong position for our customers. We are currently improving our portfolio now with this merger. We are getting stronger in Indonesia.

I don't think I can give you specific answer, but we are targeting to be number one in this communications industry, we have a good position today. Distance is not far between these big three suppliers in terms of revenues, Ericsson, Nokia Siemens, and Alcatel-Lucent.

However, we have different position. Ericsson concentrates on mobile only, Alcatel on fixed only, while we are the most balanced on fixed and mobile. This will be our differential factor in our portfolio, and we aren't setting any exact targets for ourselves.

Regarding your vision that five billion will be connected by 2015 through broadband connectivity and the fact that many Asian countries have relatively small numbers of internet users, especially in Indonesia, where only six million people using internet, of the total population of 260 million, how do you think this will work?

By 2015, there will be five billion people not only having basic communication but being always connected through broadband connections. A big part of the people in India and Indonesia should have the capability.

It will be through mobile connection or different types of fixed broadband access. These devices need to be developed, the tariff, the cost also for broadband service should also be reduced.

So while this affordability is improving constantly and the device trend is supporting this, we believe that we are becoming more and more aggressive.

Do you have any problems with regards to the regulations in Indonesia?

I must confess that I don't know the details of what your regulators have been doing so far. But it seems that your regulators are looking ahead and we don't see any problems with the regulations so far, given the fact that you were able to launch the 3G services last year and it is a positive signal for us to develop the network services.

How do you see the future of the 3G market in Indonesia? Is there any chance that it will expand massively, like the ones in Korea and Japan?

All these particular areas explain that we are moving to a direction, all we are doing is to make sure that WCDMA becomes more affordable, so it will follow the rule of GSM and become as affordable by 2015 as GSM today.

However, each country needs to continue investing in infrastructure generally. Together with operators, I think the operators should work with the suppliers to promote further innovations.

They need also to improve their efficiency. I think they should take risks, they should expand the coverage, provide the service even in the areas where they have enough traffic.

For the volume has been increasing in new growth markets, where the prices of mobile phone are going down; the infrastructure has become more efficient, and therefore operators in new markets could address more and more subscribers.


Tue, 27 Feb 2007
From: JakChat
Comment by chewwyUK
Reading this I am guessing that Nokia paid for the trip to Barcelona. They failed to ask the key question of ...

"since this merger was announced early last year some $8 million USD has been "misplaced" by Siemens Indonesia. Is this true? If so which one of your employees ran off with it?"

This is one to watch over the next year ... Siemens is like a government run company and I can see a lot of people going from there over the next year.


Tue, 27 Feb 2007
From: JakChat
Comment by riccardo
No doubt Siemens-Nokia paid for the trip, with the sole intention of manufacturing positive Publicity.... crass sell-out by the JP again, without even a mention of the scandal. In fact, looking through their archives, there is nothing at all!

Here's a story about it with perhaps the Headline of the Year:
-------------------------------------------------------
Siemens stains spread

By Chris Mellor, Techworld

Bribery investigations at Siemens have spread to a new division, and the chairman is reported to be trying to get rid of the chief executive to save his own skin.

The scandal, which began in the company's telecommunications division, and led to arrests at the giant German company. Despite allegations surfacing in new parts of the company, the AGM passed off peacefully - though the chairman is reported to be trying to get rid of the CEO.

While the chairman was denying responsibility for the known trouble at the AGM, Munich prosecutors were investigating a KPMG document which extended it. The 6 November 2006 report details suspicious payments made to win contracts. More than twenty people were paid 100 million. A lot of cash was moved to United Arab Emirates, Cyprus, Indonesia and Sudan, and its use there is unknown.

The payments were made by the fixed line telecommunications business, and also by a division new to the scandal; Siemens ICM mobile communications business. A sum of 1.7 million went to a Siemens Swiss subsidiary, Intercom Telecommunications Systems during 2005 and 2006. ITS was wound down two months after being raided by prosecutors in March 2006, amid suggestions that its role was to funnel bribes.
Affected divisions

The Siemens divisions implicated in the corruption scandals include the fixed line telecommunications unit, the ICM mobile telecommunications business and the Power, Transmission and Distribution business. With corrupt practices surfacing in three separate divisions, it is becoming harder for the Siemens senior management to deny knowledge of the problem.

If they were not involved, then their financial supervision was slipshod. To be duped by underlings is, at best, slipshod.

At the AGM, Dr. Heinrich v. Pierer, Siemens' chairman, executed a chairman's 2-step dance, when he said: "I deliberately would like to address the doubts that have been expressed about whether I as Chairman of the Supervisory Board could in fact give my full support to the (corruption) investigations and its consequences, since a substantial part of the questionable activities took place during the period when I was CEO."

"First: I have already explained that I took major steps during my period as president and CEO to fight corruption. And you can be assured: I am deeply distressed that these efforts were not successful enough. I have therefore pledged my unconditional support to all those who are charged with clarifying the situation."

"And second: I would like to emphasise that responsibility for action in this matter clearly lies in the hands of the Audit Committee, as the bylaws of the Supervisory Board foresee.... In order to avoid any appearance of a conflict of interest, I already proposed in December that I no longer take part in the meetings of the Audit Committee that deal with the compliance issues. ... With this step, I believe the concerns of a conflict of interest have been addressed."

But it is not just about a conflict of interest or giving full support to enquiries. It is about whether the continued role of the current chairman, who was CEO and responsible when the corrupt activities occurred, and ineffective in preventing them.
New CEO

Astonishingly Der Spiegel reports that Pierer is trying to get rid of the new CEO, Klaus Kleinfeld. Denied by Kleinfeld's spokesman, the rumour surfaced after senior executives outside the company apparently said they had been approached about filling his job.

Such an attempt looks like an effort by the pressurised Siemens chairman to produce a senior enough scalp to get himself and the company off the hook.
Previous Siemens Techworld reports

Previous reports on the developing scandal are listed here:-

Siemens skewered by slush fund scandal - 20 Nov 06
Siemens fraud investigation deepens - 23 Nov 06
Siemens slush fund scandal deepens - 13 Dec 06
Siemens-Nokia joint venture delayed - 15 Dec 06
Siemens faces price-fixing fines - 22 Jan 07
Siemens fined 275m - 24 Jan 07

The joint-venture with Nokia is still supported by both Siemens and Nokia and preliminary moves to form it have been made


Tue, 27 Feb 2007
From: JakChat
Comment by chewwyUK
Most of the vendors in Indonesia are forced to "make payments" to win contracts. I only know of one that doesn't and they don't have much success in winning new business.

Maybe Siemens should have done a better Job of hiding the payments. I heard speculation that one of their competitors decided to register patents for new technologies in other peoples names to ensure a constant life long source of revenue goes to the person who signs off on the deal

You don't get 40% of market share without getting dirty ... anybody who says they didn't know about it is i liar



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