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Wireless Utopia

The journey towards a free wireless world.

Nortel's UMTS Sellout

Friday, September 01, 2006

Finally the UMTS deal between Nortel and Alcatel (or Alcatel Lucent as the official name seems to be) is being confirmed. Alcatel is buying out Nortel's UMTS business for a cool $320 Million. Nortel had around 10 percent share of the UMTS network infrastructure market. With this acquisition the combined market share of Lucatel's would be around 16 %. And it would give Lucatel access to the vast European market. The leader would still be Ericsson with a 30 % market share.

The rumors regarding this deal had been going around for some time. Nortel's CEO, Mike Zofirovski had earlier indicated that Nortel would move out of businesses in which they dont have 20 % market share. And the 3G business was one of them. This deal would go a long way in leading Nortel out of the woods. Since the telecom downturn, Nortel has been struggling with losses and falling revenues.

This deal would seem to the last major one in the consolidation wave kicked off by the Lucent Alcatel merger. After that Nokia and Seimens got together and spun off a seperate joint venuture for Network Equipments and Motorola aligned with Huawei for the UMTS business. The battle lines are now fully drawn and everyone has chosen their sides.

Its on to the main action now; the battle for UMTS gear marketshare.

Update: The official press release is up. The intriguing part is that Nortel still keeps GSM, GPRS, EDGE and GSM-R. Is GSM family still earning profits? If it does, how did Nortel get upstaged in the evolution process in the first place? Its still hoping to have a 4G portofolio (read WiMAX and the likes). Maybe it will acquire some WiMAX startups then!

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posted by Rajiv, 3:51 AM

2 Comments:

With some many mergers happening, it is very interesting to see how things take shape in telecom world. In my opinion, these giants have to change their business model and start working closely with the operators (like Ericsson is doing with Airtel). There is lot of opportunities for companies from emerging countries (China, India) to take up the space left open by these giants.
Said Blogger Sujai, 5:40 AM  

Yes. I agree. With their vast knowledge base about about RF planning and experience of deployments they would be the ideal people to lay out and manage networks. But its hard to see them moving away from manufacturing equipment. That is still a big moneyspinner.

Even Nortel has been pondering about services as a way to increase their revenues. They are specifically looking at the Enteprise market. The first deal in that was the Microsoft one.
Said Blogger Rajiv, 6:15 AM  

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