by CIO Staff

Alcatel to Purchase Nortel’s UMTS Business

Sep 01, 20062 mins
Mergers and Acquisitions

Alcatel has reached a preliminary agreement to buy Nortel Network’s third-generation (3G) mobile phone network business for US$320 million.

Under terms of the proposed deal, Alcatel will acquire Nortel’s Universal Mobile Telecommunications Business (UMTS) radio access business, including 14 Nortel customer contracts, the companies announced Friday. UMTS is a 3G telecom standard used in Europe based on wideband code division multiple access.

The deal would make Alcatel one of the biggest suppliers of UMTS gear worldwide, giving it contracts with one in four UMTS operators, it said.

The companies have signed a nonbinding agreement to merge and hope to close the deal by the end of the year. Closing the merger depends on arriving at a final acquisition agreement, negotiations with works councils, and securing regulatory and other approvals, they said.

A “significant majority” of Nortel’s employees in the UMTS division would be transferred to Alcatel, the companies said.

The deal appears not to affect Alcatel’s proposed merger with Lucent, announced in April. That deal is due to be voted on by shareholders of both companies on Sept. 7, although some Lucent shareholders opposed the deal and are trying to block the vote in court. Alcatel said it would involve Lucent in the integration of the UMTS business.

The sale by Nortel continues a restructuring plan at the company that has included 1,900 job cuts over the next year. The Canadian company said in a statement its UMTS access business “lacks the scale and momentum needed to become profitable.”

Nortel said it will continue to develop global system for mobile communications and other mobile technologies, as the company focuses on emerging 4G mobile video and multimedia services.

Alcatel sees the acquisition as a way to build on an expanding UMTS market and increase its technology portfolio for major operators such as Orange and Vodafone.

-Jeremy Kirk, IDG News Service (London Bureau)

Related Links:

  • French Advisory Firm Opposes Lucent-Alcatel Merger

  • Alcatel, Lucent Unveil Merged Name

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