RealTime IT News

Nortel Finalizes 3G Sale to Alcatel

Alcatel-Lucent paid $320 million for Nortel's money-losing UMTS access business, a move that finalizes a September agreement. The deal results in one-fourth of the 3G operators being Alcatel customers.

In a statement, Alcatel said that once closed, the Paris-based company plans to thoroughly integrate the extended customer base. In addition to Nortel patents and technology, Alcatel gains 16 new 3G customers and 1,700 employees, the bulk research engineers from France, Canada and China.

Nortel's UMTS business accounted for less than 10 percent of revenues and was losing money.

"There are simply too many players in this area; our business is simply not strong enough to justify continued development," Nortel CEO and President Mike Zafirovski said in a September conference.

Alcatel has been quietly and intelligently positioning themselves, Lance Wilson, analyst with ABI Research said. That positioning included the $13.4 billion merger with Lucent Technologies, a strong CDMA player, he added.

Wilson described a "schizophrenia" in the wireless infrastructure market. As IP-based communications gain ground, equipment providers aren't as important.

Although Nortel is shedding its UMTS access business, the company will continue developing products based on GSM, GPRS and CDMA technology.

The UMTS business fell within Nortel's 20 percent solution for regaining fiscal performance. Earlier this year, Zafirovski said any unit that did not maintain 20 percent market share would be sold.

Nortel earlier sold off its blade business to a California-based equity firm for an undisclosed sum.

Alcatel-Lucent is the product of a $13.4 billion merger earlier this year between French-based Alcatel and U.S. Lucent Technologies.