Nortel and LG form joint venture

Nortel and LG have signed a joint venture agreement to provide telecommunications equipment and networking solutions in the wireline, optical wireless and enterprise areas.

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By  Simon Duddy Published  September 7, 2005

Nortel and LG have signed a joint venture agreement to provide telecommunications equipment and networking solutions in the wireline, optical wireless and enterprise areas. The venture, tentatively named LG-Nortel Networks, will focus primarily on developing and producing telecom equipment for 3G wireless networks based on W-CDMA (Wideband Code Division Multiple Access) technology. LG will transfer its telecoms gear business into the venture, while Nortel will bring fresh investment. Nortel will own 50% plus one share in the joint venture, in exchange for which it will contribute its South Korean distribution and services business and pay LG US$145 million and other non-monetary considerations. LG may also be entitled to payments over a two-year period based on achievement by the joint venture of certain business goals. “This is another milestone for Nortel as we continue to demonstrate our commitment to expand in Asia,” says Bill Owens, vice-chairman and chief executive officer of Nortel Owens. “To be a global communications provider, it is imperative for us to expand our market share and compete in Asia. South Korea is known for its advanced and trailblazing technology in communications. Our relationship with LG better positions Nortel in the dynamic and growing Asia market, expedite research and development, and benefit our global customers,” he adds. LG and Nortel will nominate key executives to the management team of the joint venture. J R Lee of LG Electronics and Paul House of Nortel are tipped to be the chief executive officer and chief operating officer respectively of the new company. “Our joint venture with Nortel is expected to create greater synergy between our cutting-edge technology and Nortel’s expertise in delivering communications capabilities,” says LG’s CEO and vice chairman S. S. Kim. “Nortel is a powerhouse in the world’s telecommunications equipment market with strong technology and global competitiveness, while LG is a top-notch telecommunication equipment and solutions provider – we were the first company to provide a WCDMA system with video telephony in late 2002. We now want to set the standards for the next generation infrastructure and improve time-to-market in this competitive environment,” he adds.

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