Formed by Nokia (NOK1V.HE) and Siemens (SIEGn.DE) in 2007, Nokia Siemens has struggled for profitability due to pricing pressure from Chinese rivals ZTE Corp 000063.SZ and Huawei Technologies Co Ltd HWT.UL and Sweden's Ericsson (ERICb.ST) in a broad economic downturn that has crimped spending by telecoms companies.

Overall spending by telecom operators is expected to be flat this year, CEO Rajeev Suri said in Bangalore on Tuesday, although Nokia Siemens sees "some rebound" in investments by customers in the United States in the current second half.

To improve profitability, Nokia Siemens is selling non-core units and laying off about a quarter of its staff.

"I would say overall we have about six divestments that already took place," Suri told reporters. "They're either not core to our mobile broadband or we see that the profitability is not where we want it to be."

The company has sold off its network equipment for wired networks and exited the market for WiMax, a wireless technology that has failed to win as much support among carriers as Long Term Evolution (LTE).

Earlier this month, Ericsson was reported to be in pole position to buy Nokia Siemens' BSS unit, which provides billing and charging systems for telecoms operators.

Suri said the group's restructuring was on track, with the company about six months ahead of its plans. He expects headcount in India to increase after the restructuring, as the company scales up its offshore services capabilities in the country. The company currently has around 10,000 staff in India, plus another 5,000 contractors.

The restructuring seems to be paying off with Nokia Siemens generating positive cash flow for three straight quarters, and Suri expects that to be sustainable.

"We've taken out significant amount of headcount already, we're on track in the business line divestiture as well. As I said, we have a couple more (divestments) to go, but we're on track there as well."

(Reporting by Harichandan Arakali; Writing by Aradhana Aravindan; Editing by Ian Geoghegan)

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