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Telecommunications Alcatel to buy Nortel's WCDMA access business
Telecommunications Alcatel to buy Nortel's WCDMA access business | Alcatel to buy Nortel's WCDMA access business |
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| by Stuart Corner | |
| Saturday, 02 September 2006 | |
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Alcatel said the deal would give it an additional fourteen UMTS customers around the world for a combined global footprint that amounts to one in four UMTS operators. "Alcatel would also significantly reinforce its presence with Tier-1 operators, especially in world-leading 3G markets such as South Korea, Italy, Spain, France, and the UK...With this deal, Alcatel should become one of the world's largest suppliers of UMTS radio access solutions, and further reinforce its technology edge at a time when the UMTS market is expanding rapidly," the company said. It claimed also that the deal would "put Alcatel in a unique position to serve the needs of major upcoming 3G markets, such as China and other key fast-growing regions." Alcatel said that, when this acquisition and its merger with Lucent are complete, it would be the only global player with wireless technologies "addressing any spectrum that customers may own: any evolutionary path to 4G from any technology; a strong presence in leading 3G markets worldwide; and the WiMAX building blocks to smooth the path to 3G long term evolution (LTE) and CDMA2000 1x EV-DO Rev C." There seemed to be a consensus among analysts that Alcatel had scored a bargain. Although neither side disclosed any details about the financials of the business, Light Reading reported several valuing it at up to $US500 million. Nortel CEO Mike Zafirovski said the business generated less than 10 percent of Nortel's total sales, which would put a $US1 billion ceiling on its revenues. The market seemed to believe the deal would be a good one for Nortel: its share price rose one percent as a result in the wake of the announcement. Nortel claimed the deal would "enable Nortel to simplify its business and strategically focus its investments for leadership in key markets while ensuring its customers' UMTS access requirements will continue to be met." According to Zafirovski: "Nortel is sharpening its focus on the markets in which we intend to lead. Our UMTS access business lacks the scale and momentum needed to become profitable." Nortel said it would continue to develop and support solutions for the evolution of GSM access and core, GSM-R, GPRS and EDGE technologies as well as CDMA access and core and UMTS core. Richard Lowe, president, mobility and converged core networks, said: "We are absolutely committed to mobility and plan to lead the 4G evolution and play a key role in the mass market adoption of mobile video and multimedia services. With a strong position in GSM and CDMA, an established service provider customer base, and technology leadership in key areas like OFDM-MIMO, we have a solid foundation for success going forward." The parties are targeting to complete the transaction in the fourth quarter of 2006.
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