Ratings agency Fitch said the timing of Nokia’s acquisition of Siemens’ stake in the Nokia Siemens Networks (NSN) joint venture could be “problematic”, placing pressure on the recovering Finnish vendor’s balance sheet at a time when the future of its handset business is still uncertain.

Fitch said that overall, the acquisition of NSN is positive as the infrastructure business’ future “looks more secure than that of the group’s Devices and Services” business. NSN’s strategy of focusing on higher-margin projects and more profitable regions at the expense of a broader geographic scope “seems to be paying off”.

But the outlay of €1.7 billion on NSN will weaken the group’s balance sheet at a time when the ability of the handset business to generate a profit is “questionable”.

Fitch Ratings said that Nokia’s group performance over the last 12 months has “exceeded our expectations, helped largely by strong profitability and cash flow generation at NSN”. However, it also observed that “the telecoms equipment market is likely to remain quite cyclical and affected by the expected soft economic conditions”.

“NSN’s future performance will not be immune to these industry trends,” it concluded