Overview

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Enabling a mobile world A word from our customer: U.S. Cellular Who we are and what we do 2012 highlights A letter from our Chairman Our Board of Directors A word from our customer: SoftBank
Annual Report 2012 3

Overview Who we are and what we do

The worlds mobile broadband specialist

Nokia Siemens Networks, a joint venture between Nokia and Siemens, is the worlds specialist in mobile broadband. We provide mobile operatorswith hardware, software andservices to plan,design and build their networks; tooperate and maintain those networks;and to enhance their customers experience.

Across the world, the demand to be connected anywhere, anytime, using any device, is exploding. Addressing that challenge requires network infrastructure that only very few companies can provide and Nokia Siemens Networks is one of those companies. Our focus is on the mobile broadband technology and services thathelp mobile operators to meet the challenges of today and tomorrow: from the radio equipment found on towers and rooftops around the world, to the sophisticated software systems that manage complex networks, to the services that make it all worktogether. Our customers include most of the worlds leading telecommunications companies, including Amrica Mvil, China Mobile, Deutsche Telekom, SoftBank, Telefnica, T-Mobile USA, Verizon and Vodafone. Our organization is based on two businesses units: Mobile Broadband and Global Services. In 2013, we have customerfocused sales and delivery organizations grouped into three large geographical areas: North America, Europe and Latin America, andAsia, Middle East and Africa.

Our business units Together, our Mobile Broadband and Global Services business units ensure that mobile operators can efficiently provide their customers with a superior experience.

Mobile Broadband
Mobile Broadband Our Mobile Broadband business unit provides mobile operators with radio and core network software together withthe hardware needed to deliver mobile voice and data services. The product portfolio includes Liquid software, which allows unrivalled flexibility and adaptability including migration towards a cloud architecture; network management tools that provide a real-time view of the network performance and quality of service; and customer experience management software that monitors and adapts network and service experience.

Global Services
Global Services The Global Services business unit provides mobile operators with a broad range of services, including professional services, network implementation and customer care services. Within professional services arenetwork planning and optimization, systems integration and managed services for network andserviceoperations.

Nokia Siemens Networks

Key statistics

Achievements An industry-leading 4G (LTE)portfolio with 77 commercial contracts atyear-end 2012

58 400 employees

Named number one inLTEinnovation and implementation for the second year in a row by ABIResearch

Only company supplying LTE radio technologies to allmajor mobile operators inJapan and South Korea 3 million mobile base stations in service todate A powerful services player that has articulated a credible plan on how it intends to focus, according to Current Analysis

Deployed networks that help people stay connected in over 150 countries

Substantial improvements inall areas of product quality, including a 32% year-onyear reduction in open customer defects

Annual Report 2012

Overview 2012 highlights

Execution, progressand momentum

In 2012, Nokia Siemens Networks made significant progress in executing its strategy to focus on mobile broadband. The impact is visible in the vastly improved financial performance and operational achievements over the year. From a financial perspective, it was the best year in our history. Operationally, it was a milestone year as well. Our efforts to deploy our innovative technology into thehigh growth areas of the mobile broadband market showed strong momentumand, importantly, received strong endorsement from ourcustomersand positive reactions fromindustry analysts.

Financial highlights

13.4bn 822m 30.7% 1 .3bn

Operating profit before specific items* of 822m, up145% from335min2011.

Full-year sales of 13 372m, down slightly from 13 645m in2011despite divestments and significantcountry and contract exits as part of our restructuringprogram.

Significant improvement in gross margin before specific items* to30.7%,up from 27.5% in 2011.

Key financials 2012

EURm

Rigorous working capital management helped to drive positive cashflowinevery quarter of the year, strengthening the Groupscash position, with a net cash positionof1285m in 2012, up from 8m in 2011.
*T  he before specific items financial measure excludes specific items for all periods: restructuring charges, country/contract exit charges, merger-related charges, purchase price accounting related charges and other one-time charges.  t December 31, 2012, Optical Networks was classified as a disposal group A heldfor sale and is presented as discontinued operations on a separate incomestatement line, Loss for the year from discontinued operations. Allcomparative Optical Networks results for the years ended December 31, 2011and 2010 have been re-presented as discontinued operations on the faceof the income statement.

Net sales Operating profit before specific items Operating profit % before specific items Operating loss after specific items Operating loss % after specific items Loss for the year EBITDA before specific items

13 372 822 6.1% (741) (5.5)% (1 445) 1 094

Nokia Siemens Networks

Operational highlights Successful transition to a focused mobile broadband company: Achieved world record 4G mobile network throughput at 1.6 Gb per second in 2012. This was our fifth straight 4G speed record in 2012. Unveiled industry award-winning Flexi Zone solution for deploying a small cell overlay for fast and flexible 4G network coverage in high-density areas:  Flexi Zone is by far the most innovative approach taken by any of the tier one Original Equipment Manufacturers (OEMs). Michael Thelander, Chief Executive Officer and Founder, Signals Research Group

Through selectively exiting non-core lines of business, NSN has also moved to transform its corporate culture to achieve a flatter, more responsive structure. When combined with efforts to establish quality as a differentiator, NSN is creating a nimble and effective competitive force. Ken Rehbehn, Principal Analyst, Yankee Group

Demonstrated our commitment tostaying at the forefront of mobile broadband innovation with the opening of a mobile broadband testing and development facility at Silicon Valley inthe USA.

Launched the first vendor operated Service Management Capability Center for global delivery of service operations and management: We are delighted that Nokia Siemens Networks has come up with an end-to-end approach to manage the service lifecycle efficiently and thus enhance customer experience to a newlevel. Vishant Vora, Director Technology, Vodafone India Ltd, Vodafone India

Demonstrated the reliability of core virtualization and cloud management witha top global operator (part of the leading Liquid Core architecture).

Introduced industry award winning CEM on Demand solution, a userfriendly online portal for managing customer experience:  NSNs early championing of CEM, as early as a year ahead of rivals, is likely responsible for the companys positive recognition among operators. Jason Marcheck, Service Director, Current Analysis

Developed the groundbreaking Liquid Applications which redefines the role of the base station by turning them into local hubs for service creation and delivery, and transforming the mobile broadband customer experience.

Maintained the lead and strong performance in packet core:

Nokia Siemens Networks mobile packet core solution is very threatening in the market, because it was one of the early EPC solutions and has maintained market momentum with major mobile operators based on functionality and quality of experience, and now with class leading performance. Glen Hunt, Principal Analyst, Current Analysis

Annual Report 2012

Overview A letter from our Chairman

A year of significant progress

In this letter my first as Chairman of NokiaSiemens Networks I am pleased to report ayearofsignificant progress. Towards the end of 2011, we announced a new strategic direction, along with a substantial, two-year restructuring program designed togive us a strong foundation for the future. Those efforts are already showing results. We delivered the best financial performance in our six-year history, with operating profit before specific items up 145% to EUR 822 million. After specific items, we reported a full-year operating loss of EUR 741 million, reflecting theongoing costs of our investment into restructuring. Over the course of 2012, deep structural changes were made to Nokia Siemens Networks that will enable it to better compete in coming years. Non-core businesses were divested; headcount wassignificantly reduced; poorly performing contracts and countries were exited; non-personnel costs were reduced; pricing discipline was improved through centralization; leadership was upgraded; quality was enhanced; roadmaps were stabilized; andoverall governance was strengthened. Given this progress, we were able to raise our cost savings target inearly 2013.

To be clear, however, our work is not yet done, and significant opportunities for further improvement remain. Product quality canbe further improved, and roadmaps better aligned to customer needs. Productivity and efficiency can be strengthened. Employee morale and engagement can be boosted. In short, while we have made considerable progress, the speed and momentum of our change must continue in 2013. Maintaining this progress is essential as we do not expect a significant change in market conditions in 2013. Despite strong underlying fundamentals, particularly continued data traffic growth, we expect the mobile broadband market to be relatively flat, as operators maintain tight control of both capital and operating expenses and macro-economic conditions remain uncertain. Asaresult, of this market environment, we expect competition to remain challenging. Looking forward, I remain confident that our new strategy and underlying structural changes put Nokia Siemens Networks on theright path to become a sustainably profitable business. Our longer term view is that the new strategy, combined with excellence inexecution, enables us to target on a longer term an operating margin of between 5% and 10%*. The publication of this report in which we are sharing details about the performance of our business at a more granular level than ever before is a step forward in greater transparency and engagement with stakeholders both externally and internally. In introducing it, I would like to thank our shareholders Nokia and Siemens for their support of Nokia Siemens Networks, and to take this opportunity to thank all our employees for their dedication and commitment to the business. Their actions have helped us to deliver a game-changing year for Nokia Siemens Networks and have made a real difference inpositioning the Group for the future. Jesper Ovesen Chairman

The longer term view of Nokia Siemens Networks is that our new strategy, combined with excellence in execution, enables us totarget ona longer term an operating margin ofbetween 5% and10%*.

* Excluding specific items.

Nokia Siemens Networks

Overview Our Board of Directors

Drawing on our expertise

Left to right: Jesper Ovesen Chairman of the Board of Nokia Siemens Networks Juha krs Executive Vice President Human Resources of Nokia

Timo Ihamuotila Executive Vice President Chief Financial Officer of Nokia Joe Kaeser Member of the Managing Board and Chief Financial Officer of Siemens Barbara Kux Member of the Managing Board and Chief Sustainability Officer of Siemens

Louise Pentland Executive Vice President Chief Legal Officer of Nokia Peter Y. Solmssen Member of the Managing Board and General Counsel of Siemens

Outgoing Niklas Savander Riikka Tieaho Siegfried Russwurm

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To find out more about our Board of Directors see p55.

Annual Report 2012