Nokia has announced plans to buy out its fellow shareholders in Symbian, the British mobile phone software developer, to create a free mobile phone operating system to compete with rivals such as Google.

The Finnish mobile handset maker will pay €264 million (£209 million) for the 52.1 per cent stake in the London-based company it does not already own, buying out Sony Ericsson, Panasonic, Siemens and Samsung.

In addition, Nokia said it will establish the Symbian Foundation, together with other technology and telecoms heavyweights from across the industry, to create one free, open mobile software platform.

Board members of the foundation include operators Vodafone, AT&T and NTT DoCoMo, fellow handset makers Sony Ericsson, Motorola, Samsung Electronics and LG Electronics, and microchip makers Texas Instruments and ST Microelectronics.

The foundation will unite Symbian’s operating system and the S60 user interface, both donated by Nokia, together with user interfaces from Motorola, Sony Ericsson and DoCoMo.

Foundation members say creating a free operating system will enable greater innovation in services and applications.

The move is a response to the growing threat from rivals such as Google, which is developing its own open and cheap platform for mobile phones, called Android, and operating systems from Research in Motion (makers of the BlackBerry) and Apple.

Google has challenged the commercial model, stating that its Android platform will bring the cost of software to “close to zero”.

Symbian’s software is used on 200 million mobile phones worldwide, equal to 60 per cent share of the smartphone market – high-end phones that allow users to email and connect to the internet – and 7 per cent of all mobile phones.

Currently the company charges licence fees of $2.50 to $5 per handset whereas the Symbian Foundation software will be free.

Symbian’s closest rival is Microsoft’s Windows Mobile operating system, which has 13 per cent of the market. According to research firm Strategy Analytics, Microsoft charges $8 to $15 per phone.

Geoff Blaber, an analyst at CCS Insight, said: “The move is a shrewd response to growing threats from other providers of mobile phone software.”

He added: “It was only a matter of time before Nokia bought out its five partners in Symbian. CCS Insight estimates Nokia paid out more than $250 million in Symbian licence fees last year, so it makes commercial sense to buy Symbian for about $410 million, rather than keep paying what is effectively a subsidy to the other shareholders.

Carolina Milanesi, handset analyst at Gartner, said: “This puts a lot of pressure on Microsoft right at a time when they are trying to really push into the consumer space.”

She added: “Lower price points are what operators and the market need to push smartphone adoption and dropping royalty is going to help that. For operators this offers a good alternative to Android.”

Nigel Clifford, chief executive of Symbian, said: “Our vision is to become the most widely used software platform on the planet. Today’s announcement is a bold new step to achieve that vision by embracing a complete and proven platform, offered in an open way, designed to stimulate innovation, which is at the heart of everything we do.”