Mobile telecoms equipment maker Nokia Siemens Networks will sell its optical fibre networks unit to Marlin Equity Partners.
NSN didn't give any financial details for the sale but said it would be completed in the first quarter of next year.
As a result of the deal as many as 1,900 employees, mainly in Germany and Portugal, will be transferred to the new company, NSN said in a statement.
Nokia Siemens Networks, which competes with Ericsson, Huawei and Alcatel Lucent, is undertaking a cost-cutting plan, which includes laying off a quarter of its staff and selling product lines to focus on mobile broadband.
The joint venture between Nokia Oyj and Siemens AG has been a drain on profits for owners Nokia and Siemens but it reported record profits in the third quarter, helped by sales of equipment for fourth-generation high-speed LTE networks in Japan and Korea.
The restructuring is expected to result in 1 billion euros of cost savings by the end of next year.