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Alcatel Has Option for NT’s GSM business?
By Mark Evans | March 21, 2007
According to AFX, Nortel has signed an agreement with Alcatel-Lucent giving the Paris-based company the first option to buy Nortel’s GSM assets if they’re put on the block. The deal, which last until 2008, gives Alcatel-Lucent the optoin to a buy a licence to use Nortel’s GSM and/or long-term evolution technologies for a total of $65-million ($50-million for the GSM technlogy and $15-million for the LTE technology.
Update: The news report is inaccurate (or I just read it wrong). The reality is Alcatel-Lucent has an option to buy GSM and LTE licensing rights from Nortel for $50-million and $15-million respectively but not the technology.
That said, there has been lots of chatter about Nortel selling its GSM business because it doesn’t have enough market share to really a viable player in the market. The question is whether Nortel wants to scale back its wireless business even further after selling the UMTS unit to Alcatel last year for $320-million, If Nortel did decide to sell its GSM business, it would leave the company’s wireless unit entirely dependent on CDMA (not a fast-growing market given GSM appears to becoming the global standard) and Wi-Max to drive sales.
In a recent research note, TD Securities analyst Chris Umiastowski said Nortel CEO Mike Zafirovski realizes Wi-Max is a “show me” business but many customers have taken a “the door is always open” approach if Nortel can show it can strong 4G technology. While it may be way too early to assess the Wi-Max’s market competitive landscape, it’s far from certain that Nortel is among the lead group.