Sanyo and Nokia Form New Handset Business

The two handset makers have signed a preliminary agreement to form a new venture combining their CDMA mobile phone businesses.

Handset makers Nokia and Sanyo have agreed to merge their CDMA phone businesses into a separate venture with major operations in the United States.

The two companies said that they have entered into a preliminary agreement to form the new company, which will be created by combining their CDMA assets. The name of the company was not detailed.

The new entity will be a completely separate firm owned by the two parent companies, and will have its facilities based out of San Diego in the United States and in Tottori, Japan.

By locating themselves in San Diego, the new phone maker will be close to CDMA inventor Qualcomm, which is also headquartered in the city.

The companies said that they expect to sign a final agreement establishing the joint business sometime during the second quarter of 2006, with the new firm expected to begin operations in the third quarter.

The venture pairs Nokia, the worlds largest handset maker, which markets a number of successful CDMA products, with Sanyo, an old line Japanese electronics manufacturing conglomerate that has slipped below the top tier of mobile device makers worldwide.

Officials from the two partner companies said they believe the combined entity could become the top producer of CDMA handsets on the market, as Nokias products and expertise are fairly well-rounded and Sanyo adds strength in midrange and high-end CDMA handsets as well as relationships with operators in Japan and North America.

"We identified this new entity as the best way to create an attractive CDMA phone portfolio for our customers with the widest possible product offering at the high-end, midrange and entry levels," Olli-Pekka Kallasvuo, president of Nokia, said in a statement.

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"It also offers both parties timely access to R&D competencies that complement their own internal strategies," he added.

Speaking at the ongoing 3GSM World congress in Barcelona, Spain, Nokia CEO Jorma Ollila said that his company would sell roughly 40 million 3G handsets during 2006.

The company also introduced three new wireless phone models at the conference.

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