German conglomerate Siemens AG is set to complete its spin-off plan to revive its handset business before October, sources close to the company said yesterday.

"The company is to reorganize the money-losing unit into an autonomously operating legal entity," the source who declined to be named told China Daily.

The company announced its spin-off strategy in April, aiming to dispose of its Mobile Devices and Customer Premises Equipment units from the Communications Group. At the time no firm timeframe was announced.

According to the source the spin-off will allow faster decision-making and greater flexibility, customer-tailored services at all stages of the value chain, greater freedom of action with respect to partnerships, as well as the opportunity to establish more direct marketing channels.

Siemens has already decided to withdraw from the Australian market - aiming to cut its losses in September this year.

In the Chinese market Siemens has been slow to unveil new handset models compared to rivals Nokia, Motorola, Samsung and SonyEricsson, though Siemens (China) Ltd has reiterated it will work hard to improve the profitability of its mobile phone business.

Following recent below par performance, rumours have been rife of negotiations with various foreign and domestic handset makers about a possible purchase plan, with links being made between Siemens and Samsung, Bird Co, LG, NEC, Motorola, Huawei Technologies and ZTE.

But Siemens refuses to release details about potential partnerships before any contracts are inked.

Zeng Jianqiu, a professor at the Beijing University of Post and Telecommunications, believes Siemens' strategy indicates it is seeking a sustainable solution for its handset business.

He said exposed to fierce market competition, handset companies including Siemens may find it difficult to recapture the success of the glory days as the previously lucrative mobile phone sector is declining significantly worldwide.

(China Daily June 1, 2005)