The deal is expected to close in the third quarter of 2013 at which point NSN will become a wholly-owned subsidiary of Nokia.

NSN was established in 2007 as a joint venture to combine Nokia Networks Business Group and Siemens' carrier-related operations for fixed and mobile networks.

In the rail industry NSN has supplied GSM-R to 30 networks covering over 50,000km in 21 countries as well as onboard broadband services. However, the company struggled in recent years and only recently reported profits following a series of cost-cutting measures. This included 17,000 job cuts announced in November 2011 which accounted for 23% of its workforce.

"With its clear strategic focus and strong leadership team, NSN has structurally improved its operational and financial performance," says Mr Stephen Elop, president and CEO of Nokia. "Furthermore, NSN has established a clear leadership position in LTE, which provides an attractive growth opportunity."

Nokia plans to retain the existing management and governance structure at NSN, with Mr Rajeev Suri continuing as CEO and Mr Jesper Ovesen remaining as executive chairman of the NSN board of directors.

Nokia says the Siemens name will be phased out of NSN branding, with a new name and brand set to be confirmed at the close of the transaction.