Nokia 2011 Annual Report Download - page 45

also faces increasing competition from competitors from China, which endeavor to gain market share
for instance by leveraging their low-cost advantage in tenders for customer contracts. Competition for
new communication service provider customers as well as for new infrastructure deployments is
particularly intense and focused on price. In addition, new competitors may enter the industry as a
result of acquisitions or shifts in technology. If Nokia Siemens Networks cannot respond successfully to
the competitive requirements in the mobile infrastructure and related services market, our business
and results of operations, particularly profitability, may be materially adversely affected.
Nokia Siemens Networks seeks to increase sales in geographic markets in which price competition is
less intense. If Nokia Siemens Networks is not successful in increasing its sales in those markets or
the price competition in those markets intensifies, as a result of the entry into those markets of low cost
competitors, price reductions by existing competitors or otherwise, our business, sales, results of
operations, particularly profitability, and financial condition may be materially adversely affected.
Nokia Siemens Networks’ liquidity and its ability to meet its working capital requirements
depend on access to available credit under Nokia Siemens Networks’ credit facilities and other
credit lines as well as cash at hand. If a significant number of those sources of liquidity were to
be unavailable, or cannot be refinanced when they mature, this would have a material adverse
effect on our business, results of operations and financial condition.
To provide liquidity and meet its working capital requirements, Nokia Siemens Networks is party to
certain credit facilities and has arranged for other committed and uncommitted credit lines. Nokia
Siemens Networks’ ability to draw upon those resources is dependent upon a variety of factors,
including compliance with existing covenants, the absence of any event of default and, with respect to
uncommitted credit lines, the lenders’ perception of Nokia Siemens Networks’ credit quality. The
implementation of Nokia Siemens Networks new strategy and restructuring plan is expected to result in
costs, cash outflows and charges. These will have a negative effect on Nokia Siemens Networks
liquidity position and may be greater than currently estimated. The covenants under Nokia Siemens
Networks’ existing credit facilities require it, among other things, to maintain a leverage ratio below a
predetermined threshold. Nokia Siemens Networks’ ability to satisfy these and other existing covenants
may be affected by events beyond its control and there can be no assurance that Nokia Siemens
Networks will be able to comply with its existing covenants in the future. Any failure to comply with the
covenants under any of Nokia Siemens Networks’ existing credit facilities may constitute a default
under its other credit facilities and credit lines and may require Nokia Siemens Networks to either
obtain a waiver from its creditors, renegotiate its credit facilities, raise additional financing from existing
or new shareholders or repay or refinance borrowings in order to avoid the consequences of a default.
There can be no assurance that Nokia Siemens Networks would be able to obtain such a waiver, to
renegotiate its credit facilities, to raise additional financing from existing or new shareholders or to
repay or refinance its borrowings on terms that are acceptable to it, if at all.
In addition, any failure by Nokia Siemens Networks to comply with its existing covenants, any actual or
perceived decline in Nokia Siemens Networks’ business, results of operations or financial condition or
other factors may result in a deterioration of lenders’ perception of Nokia Siemens Networks’ credit
quality, which may negatively impact Nokia Siemens Networks’ ability to renegotiate its credit facilities,
refinance its borrowings or to draw upon its uncommitted credit lines. Although Nokia Siemens
Networks believes it has sufficient resources to fund its operations, if a significant number of those
sources of liquidity were to be unavailable, or cannot be refinanced when they mature, this could have
a material adverse effect on our business, results of operations and financial condition.
Nokia Siemens Networks has historically received financial support in the form of additional capital
from its shareholders Nokia and Siemens. Nokia and Siemens do not, however, guarantee Nokia
Siemens Networks’ current financial obligations. There is no assurance that Nokia Siemens Networks
will receive similar or other financial support from its shareholders in the future.
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