Nortel(x) today announced that it has signed a non-binding Memorandum of Understanding for the sale of its UMTS access business to Alcatel for US $320 million, a move that will 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.
As part of its business strategy, Nortel is executing on plans to increase investment in key areas, partner in others, and divest where there is no path for it to lead or realize attractive returns.
"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," said Mike Zafirovski, president and chief executive officer, Nortel.
There are three core elements of Nortel's strategic focus - next-generation mobility, enterprise transformation, and services and applications. Much like its partnership with Microsoft announced in July, this is another key step in changing the trajectory of Nortel's business.
"With next-generation mobility, we see an opportunity to change the game by applying our networking expertise and technology innovation to significantly alter the economic paradigm of mobility solutions in the future," said Zafirovski.
"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." said Richard Lowe, president, Mobility and Converged Core Networks, Nortel. "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."
As part of its ongoing mobility business, Nortel will 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.
The proposed sale includes Nortel's UMTS access product portfolio made up of the Radio Network Controller and Node B products and OAM solutions, related services and associated assets. It is anticipated that the significant majority of employees of Nortel's UMTS access business will transfer to Alcatel. Completion of the transaction is subject to, among other things, the negotiation and execution of a definitive agreement between Nortel and Alcatel, completion of consultations with work councils and other employee representatives, and customary closing conditions including regulatory approvals. The parties are targeting completion of the transaction in the fourth quarter of 2006.
"This deal is good for our UMTS access customers. They will benefit from Alcatel's resulting scale in this market. We will work closely with Alcatel to make the hand-over as smooth as possible for our customers, with whom we plan to have strong, on-going relationships," said Lowe.
"The expertise of Nortel's UMTS team is well-known, and I am confident that our combined forces will pave the way for further success in the wireless market," said Marc Rouanne, president of Alcatel's mobile communications activities. "We are committed to support and evolve our extended customer base."