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Mobile Industry & Technology Journalist - freelance

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Nokia Siemens wants Nortel's CDMA, LTE and VoIP

By CAROLINE GABRIEL

Published: 9 April, 2009

READ MORE: Nokia Siemens Networks | Nortel Networks | VoIP | CDMA | LTE

It seems increasingly likely that Nokia Siemens is a frontrunner to acquire at least parts of the mobile business of Nortel, as it considers offers for its various business units as a possible alternative to emerging from bankruptcy protection intact but significantly pared-down.

The Wall Street Journal quotes "people familiar with the matter", saying that NSN has made an unsolicited offer for large parts of Nortel's mobile infrastructure business. Avaya and Siemens Enterprise Communications are said to have made bids for the enterprise unit. The prices offered are unlikely to be high, though Nortel will be required by banktruptcy law in the US and Canada to adopt the exit plan that brings the highest value for shareholders - which is why it is expected to consider break-up rather than the restructuring option preferred by management.

The NSN bid is reported to include CDMA and LTE products, plus TDM switches and VoIP gear. The appeal of LTE and carrier VoIP are obvious - both will be growth sectors, and Nortel has valuable R&D and patents in the former, and a strong position in the latter, signing customer deals even from within Chapter 11.

It is less clear why NSN would want to get into the other two product areas - both are on the downward curve towards being legacy technologies, and though they both still have volume and a long life ahead, it is a very late stage to be entering or expanding in mature segments.

However, if the price is sufficiently low, NSN could position itself in CDMA for the first time, taking on Alcatel-Lucent and targeting a few key opportunities rather than the mass market - notably China Telecom, and the dual-mode LTE/CDMA strategies of operators like Verizon. CDMA would also give NSN a foot in the door of some of Nortel's most high profile customers, some of which have been closed to NSN because of its lack of CDMA support. However, it would be a risky move, given that ALU has come under fire from some shareholders for holding onto the pressurized CDMA business at all, even though it is the market leader. NSN has apparently not expressed interest in Nortel's GSM products, nor in its GSM/W-CDMA core.

A third, smaller unit that the WSJ says is up for sale is Nortel's media gateway/MSS multiservice switch. Genband seems to be the main contender, looking to add to the products it acquired last year from NextPoint and also from NSN (which sold its media gateway line). Nortel has already sold its application switching and WAN optimization products to Radware for just $18m. The sale of the original unit to be put on the market, Metro Ethernet, which was on offer before Nortel entered Chapter 11, appears to be on hold.