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Reports: Nokia Siemens going after parts of Nortel

Wed, 04/08/2009 - 8:20am
Maisie Ramsay, Wireless Week

There is a very large vulture circling around Nortel. Reports are emerging that Nokia Siemens Network (NSN) has bid on large segments of the bankrupt infrastructure company, including its profitable carrier networks unit and a research and development unit working on Long Term Evolution (LTE).

Nortel has a strong presence in North America, where Nokia Siemens has been moving to gain market share under the guidance of Sue Spradley. An acquisition of Nortel’s carrier networks unit would play an important role in growing the company’s North American footprint.

Acquiring the LTE research division could give Nokia Siemens access to U.S. carrier giant Verizon Wireless, although the carrier already went with Alcatel-Lucent and Ericsson. “Because of the size of [Verizon’s LTE] deployment, there could be room for a third player. This could put them in a better position,” says Frost & Sullivan analyst Ron Gruia.

Gruia says he was unsurprised by the news of Nokia Siemens’ move to acquire strategically important segments of Nortel. “It’s confirming rumors that had been heard at CTIA,” he says. “It will give them a stronger footprint in North America and widen the relationships they have with Verizon, Bell Canada and Telus.”

According to The Wall Street Journal, Nokia Siemens made an unsolicited offer in March for vital segments of Nortel’s carrier networks group, including its profitable CDMA segment and divisions handling TDM and VoIP. If the deal goes through, it will likely involve the transfer of more than 200 employees from Nortel, according to unnamed sources in the Journal. A Nokia Siemens Network spokeswoman declined to comment on the matter.

Nokia Siemens is by no means the only company scavenging for Nortel treasure. Avaya, Siemens Enterprise Communications, Genband and Golden Gate Capital are likely bidders, according to information leaked to the Journal by multiple unnamed sources.

Nortel lost $2.13 billion in the quarter before it filed for bankruptcy. The company had experienced ongoing declines in revenue as competition ate into its customer base and was burdened by an underfunded pension and $4.5 billion in debt obligations. Nortel had burned through cash to keep its business afloat despite multiple restructurings, spending $186 million in its third quarter to fund operations and buy capital equipment.

Nortel stated it was attempting to “maximize the chances of preserving all or a portion of the enterprise” in a March regulatory filing and has since given little detail about its plans for emerging from bankruptcy.

“Whatever is left of Nortel coming out will be very different than going in,” Gruia says.

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