To: Kleinfeld, Klaus
Subject: RE: Letters from Klaus Kleinfeld and Eduardo Montes


Today we announced some very important strategic changes in our Communications (Com) Group. I want to share with you this exciting news and explain its positive impact on our entire company. In short:

The Fixed Networks, Mobile Networks and Carrier Services divisions of Com will merge with Nokia Network Business Group in a 50/50 joint venture, creating a fixed and mobile network powerhouse to be called Nokia Siemens Networks. The new company will be headquartered in Helsinki, Finland, while the European headquarters and three of its five divisions will be based in Munich. It will have operations in all major regions.

We are also determined to ensure a bright future for our Enterprise business. Therefore, we are in serious negotiations with strong players who can help create an organization with the financial strength and technological breadth to compete successfully with the dominant industry leader in all markets. We will be satisfying customers?desire for a strong competitive alternative, while continuing to provide them with reliable service and investments in productivity and revenue generating applications. And, by creating an organization with sustained profitability and growth prospects, we will be providing stability and opportunity to our Enterprise employees.

The success of the Wireless Modules division is strongly based on their industrial applications capabilities. Already today it plays an important role in our industrial machine-to-machine controls and communication business. Therefore, it will be transferred to our Automation and Drives Group (A&D) as of October 1, 2006.

After reviewing every possible option for Com future growth, we believe that these decisions offer the best opportunity for our employees and our customers. For example, Nokia Siemens Networks will provide a level of customer value ?reduction of operating costs, revenue generation applications, and service reliability ?that no other company can match, will have a strong position in the fastest growing, most profitable segment of the telecommunications industry, providing a solid financial base for the new company, and will be able to build on that market competitiveness and profitability potential to provide job security and career opportunities for our employees.

We know how to succeed with joint ventures, as demonstrated by our positive experiences with Fujitsu Siemens and Bosch Siemens Household Appliances. In the case of Nokia Siemens Networks we see even stronger prospects for success.
We are combining the network operations of the global mobile phone leader with our mobile and fixed carrier businesses at the very time that mobile and fixed technologies are converging.

With combined 2005 revenue of more than EUR 15 billion, the new company will have the scale to compete with the largest global competitors and to drive savings through improved purchasing power.

Building on two of the world finest research and development organizations, the combined company will be an innovation powerhouse in next generation technologies.

With a complementary global base of customers, the joint venture will have a strong presence in both developed and emerging markets, and one of the industry largest and most experienced service organizations.

Nokia Siemens Networks will have the entrepreneurial culture and independent management team that will enable it to act quickly to seize opportunities in the dynamic telecommunications market.

Siemens employees currently working with Com carrier operations will become employees of Nokia Siemens Networks.
We appointed Simon Beresford-Wylie as the CEO of Nokia Siemens Networks. He currently serves as Executive Vice President and General Manager of Nokia Networks unit. Peter will join the new company as CFO. He is currently the CFO of Siemens Austria.

After regulatory reviews and other approvals, we expect the merger to be completed by the end of December 2006.
The changes we announced today will ensure that our Com businesses thrive in today dynamic and consolidating telecommunications marketplace and they will contribute to the overall performance and growth outlook of Siemens as a whole.

All the very best,
Klaus Kleinfeld
........................................................
Eduardo Montes
Group President of the Communications Group

When I started as the new CEO of Com, I was very proud and eager to solve our issues together with you all. Even though I was convinced that we needed to consolidate in the future, I didn't dream of such a fast and outstanding solution for our Carrier related operations. With this joint venture we have the exceptional opportunity to become the most innovative and respected leader in our field. We can fully exploit the strengths of these two companies for the benefit of our customers and ourselves. Please embrace this new situation together with me. Let us make sure that we make the most of it.

I am convinced that we will also find a solution for Enterprise Networks that will strengthen the business in the long run and will benefit us all. I will keep you informed on further developments.

Kindest regards,
Eduardo Montes

PS: For additional information on the organization and staffing of Nokia Siemens Networks and documents relating to today announcement, please check http://www.siemens.com/press