Nortel Carrier VoIP Bids Expected Next Week

Network World — Telecom vendors are expected to bid on Nortel's Carrier VoIP and Application Solutions business next week, according to an analyst's report.

A court-approved decision on the winning bid is expected in January, according the bulletin issued this week by Catharine Trebnick of Avian Securities. Potential bidders are GENBAND, NEC, Nokia Siemens Networks (NSN) and Sonus, or a consortium organized to divide up the assets, Trebnick states in her report.

"Our dark horse bidder is NEC. Our unlikely candidates are Alcatel-Lucent, Ericsson and Huawei," Trebnick states in the report.

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A bid has been expected for months. Nortel did not confirm or comment on the Avian report.

NSN could digest the Nortel unit more easily than either Sonus or GENBAND, Trebnick notes.

"NSN has stated aspirations to increase their presence in North America," she states. "We believe the potential revenue and cost synergies for NSN would far exceed those that could be achieved by [Sonus] and/or GENBAND. NSN has a significantly larger sales organizations, international presence and product breadth."

The Nortel assets are attractive because AT&T has more than 1,500 Nortel DMS switches, representing about 700,000 T-1 Class 4 lines in operation, Trebnick notes. Over 65% of North American voice traffic runs over Nortel and/or Alcatel-Lucent switches, she states.Carrier VoIP and Applications Solutions, which employs 2,500 people, is a $800 million business, representing about 10% of Nortel's annual revenue. Nortel is selling itself off in pieces after a bankruptcy-induced restructuring plan failed.

To date, Nortel has sold off its enterprise, Metro Ethernet, application switch and wireless businesses, and shuttered its WiMAX operations.