Once the deal was concluded in the third quarter of 2013, "Nokia Siemens Networks will become a wholly owned subsidiary of Nokia," both companies said.
Siemens' decision to sell its stake comes as part of a strategic repositioning in the market: it announced in June it would shut down its loss-making solar energy unit after failing to find a buyer.
The NSN deal will allow Nokia, which has been subject to speculation it could be up for sale, to take full control of its most profitable business.
The NSN joint venture, which specializes in high-speed mobile broadband, was set up in 2007 and the partnership agreement expired in April.
Nokia said NSN would retain its headquarters in Espoo, Finland and press on with its ongoing restructuring plan, which includes the closure of 16 sites in Germany, shedding 1,000 jobs.
The buy-out will see Siemens receiving 1.2 billion euros in cash at the closing of the transaction. The remaining 500 million euros will be paid through a secured loan from Siemens due one year from closing. Nokia said it had obtained bank financing for the cash portion.
Once the star performer on the Helsinki stock exchange, Nokia has seen its market value has plunge 30% in the past two years.
The firm reported a net loss in seven of the past eight quarters amid fierce competition from Apple's high-end iPhone and Samsung's Galaxy.
Copyright Agence France-Presse, 2013