Nortel sells up UMTS radio business

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By  Published  September 30, 2006

Nortel last month announced that it had signed an agreement with Alcatel to sell its UMTS radio access business to the French vendor for US$320 million.

The deal will see Alcatel take 14 of Nortel customer contracts and so make it one of the largest suppliers of UMTS gear worldwide.

Once the agreement is complete, Alcatel will have contracts with one in four UMTS operators.

Having signed a non-binding agreement to merge the businesses, the companies hope to close the deal by the end of the year, with a “significant majority” of Nortel's employees in the UMTS business moving to Alcatel.

The deal follows several partnerships in this area, with Nokia and Siemens announcing in June that they would merge their telecommunications infrastructure operations.

Motorola and Huawei also announced that they were establishing a joint research lab for 3G.

According to Nortel, the sale will allow the Canada-based company to sharpen its business.

“Our UMTS access business lacks the scale and momentum needed to become profitable,” said Mike Zafirovski, the company's president and CEO.

Nortel says it will continue to develop GSM and other mobile technologies, as it focuses its attention on emerging 4G mobile video and multimedia services.

“There is heavy investment in WiMAX, IMS and services,” explained Zafirovski at a press briefing in London last month.

“Nortel does not have a strong position in UMTS growth hence our decision to sell the UMTS radio access business to Alcatel,” he added.

“There have been 10 projects that were dumped by Nortel in the last year, and funds from these sales is being put towards businesses that Nortel is stronger in,” Zafirovski went on to say.

Darryl Edwards, Nortel's president of the EMEA region believes the Middle East remains a strong market for Nortel.

“We are accelerating our investment in the next two years (in the region) both in the enterprise as well as corporates.”

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