NOKIA’S new chief executive underlined his commitment to an aggressive restructuring of the mobile phone group yesterday by scrapping plans to form a handset joint venture with rival Sanyo.

The move by Olli-Pekka Kallasvuo, who has been in the top job for three weeks, comes only days after he agreed to form a €25 billion (£17 billion) telecoms network equipment group by combining Nokia’s network equipment unit with that of Siemens, its German rival.

Nokia said yesterday that it had called off talks to combine one of its mobile phone manufacturing units with the equivalent unit at Sanyo. The two groups had been in discussions to forge an alliance in mobile phones using the CDMA standard. a different technology from the rival GSM standard that most mobile phone groups in Europe have adopted.

Nokia said yesterday that it considered the market for CDMA phones to be shrinking in the longer term, indicating that it would stop manufacturing low-end CDMA mobile phones by next April and possibly exit the high-end market later.

The combination of the CDMA businesses of Nokia and Sanyo would have created a venture with about 20 per cent of the market, putting it within reach of Samsung, the market leader.

CDMA is the dominant mobile phone technology in North America and is also used by KDDI, Japan’s secondlargest mobile phones operator. Europe’s market is dominated by the GSM standard, which covers 70 per cent of the world’s mobile phone users. Kai Oistamo, Nokia’s head of mobile phones, said that the ending of talks on a tie-up was “purely a pragmatic business decision”. “We feel it would not be in our best interests to make an agreement that proved to be less beneficial than originally expected,” he said.

Nokia and Sanyo first announced plans to forge a joint venture in February. Mr Kallasvuo, chief operations officer at the time, said that the proposed tie-up was “the best way to create an attractive CDMA phone portfolio for our customers with the widest possible product offering at the high-end, mid-range and entry levels”.

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