The shutdown will take effect in 2013, and the company will officially announce this closure during a workers' meeting on Wednesday, Reuters said.
Verdi union representative Mike Doeding said he had no knowledge of the message expected for Wednesday's meeting, the article stated.
"If they are to close the unit it would be an outrage," Doeding added.
When contacted by Reuters, NSN declined to comment, while Deutsche Telekom referred to NSN for comment.
NSN plans to cut costs and drop about one quarter of its staff, while it will also sell product lines to focus on mobile broadband. At the end of the third quarter, the company had 60,600 employees.
The telecom equipment market now faces tough times with stiff competition from Chinese companies like Huawei and ZTE, the article pointed out. Major telecom operators must postpone investments as the market shrinks in this bad economy.
NSN said Monday that it plans to sell its optical fiber unit to Marlin Equity Partners, which will result in the transfer of up to 1,900 employees, mainly to Germany and Portugal.