Carrier VoIP Officially on the Block

By Mark Evans | Published: December 23, 2009

As the first anniversary of Nortel’s bankruptcy protection filing comes over the horizon, the company is seeking court approval to sell its carrier VoIP business to Genband Inc. for $282-million, which has submitted a “stalking horse bid”.

Genband, which was not among the speculated buyers for the business, will receive financing from One Equity Partners to do the deal. OEP manages investments and commitments for JP Morgan Chase & Co. in private equity transactions.

These agreements include the planned sale of substantially all assets of the CVAS business globally including softswitching, gateways and SIP applications, as well as all patents and intellectual property that are predominantly used in the CVAS business.

There will likely be other bids for the carrier VoIP business. Among the potential bidders are Nokia Siemens Networks and Sonus.

With the carrier VoIP business on the block, the two big assets left within Nortel are its 50.1% stake in Nortel-LG, which LG will probably purchase after exercising a first-right-of-refusal option, and the 3,000+ patent portfolio, which includes the much-wanted LTE patents.

Source: Nortel press release

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  • wasthere

    Hope they get a good price because logically why would they sell it especially if it is profitable and is a good prospect for future growth.
    As a creditor, I would rather keep the assets and get a good return annually from it rather then selling my world number # 1 market share business for peanuts to a much smaller player like Genband. Unfortunately no one has ask my opinion on this sale even though I am the first interested party as an ex-employee and now creditor !

  • XPM_guy

    Yes, every Nortel “leader” since Roth has been doing their level best to ignore Wireline & CVoIP – it has become conventional wisdom in Nortel's boardroom that the Carrier business is something they did not want (even though it has been the backbone of the entire company since at least the 1970's) and that the future of Nortel was selling Enterprise gear to a much larger set of customers, thus sparing the execs from having to kowtow to their counterparts at Vz, AT&T, etc. What a waste…

    But the Carrier business has trundled on quite well, thank you, which is why CVAS is the only Nortel division that is or has ever been #1 and why it is the only division turning a profit and growing share in a shrinking market during the largest economic downturn since the Great Depression.

    But Genband understands the value CVAS represents – and so do some other competitors I imagine. With any luck CVAS will go for a fair price to a company that can afford to retain as close to 100% of the rank & file as possible – sure the senior management might benefit from a shake-out, but it is those experienced, dedicated front-line engineers and salespeople who are the real asset up for sale here. Without that existing skeleton crew, winnowed after a decade of relentless culling, the business they have built despite Nortel's leaders has only a shadow of its potential…

  • XPM_guy

    Genband's CEO has written an open letter to current CVAS employees explaining why he thinks acquiring CVAS makes sense for Genband and providing a rough outline as to where he sees a combined workforce heading (basically expanding Genband's interoperability footprint, especially with Nortel TDM equipment, though their market focus will still be on the full spectrum of available softswitches supporting their gateways).

    http://www.genband.com/getdoc/a4ed2f64-5b2b-4c3…

    I'm not sure there is much reassurance in there for Nortel workers – Mr. Vogt says Genband wants the business CVAS represents, a business he claims to know very well enough already with Genband's existing employees to provide a smooth transition for Nortel's CVoIP customers after Genband acquires CVAS, but he needs to get to know the CVAS people before making up his mind about whether to employ them. There is a line in the middle about “melding expertise” which could imply retaining experienced rank & file workers – let's hope so…

    But the auction date hasn't even been announced yet, so we're far from knowing who the eventual winner will be, and if that turns out to be Genband, let's hope for everyone's sake that Mr. Vogt & his team find that they need the people as well as the products to capitalize on their CVAS purchase…

  • zuperman

    yes, i heard it from many sources. also Nokia Siemens, LG, Aselsan, Çalık and Ericsson are on the race. Hope it ends well for all of us.

  • heavencanwait

    Zuperman, you mean all these for Nortel Netas or CVAS?

  • Nortel watcher

    XPM_guy,

    I think the salespeople at Nortel CVAS have the most to worry about. Genband has an extensive network of distributors and global resellers with each one offering a salesforce of their own. Take for instance global reseller Wipro from India. Not only do they have a salesforce but have a spot titled President – Global Sales and Operations that was filled in July by none other than former CALA president Martha Bejar.

    So, maybe a sales job offer won't come from Genband but one could come from Martha at Wipro….:^))

    Secondly, those that do get job offers from Genband will likely be looking at a paycut.

    Lastly, not sure how the people at director-level will fare since they will cost Genband the most to keep even if they agree to a paycut.

    All in all, Nortel CVAS may be better off as a whole with a NSN or E/// than a Genband or Sonus particularly the folks in CALA and EMEA.

  • less

    “when replacing Class 4 & 5 TDM offices” – I'm getting rusty already, whats the hardware nvolved ATCA, CS 2000…

  • asefe

    I dont have any special insider knowledge,too. I am just an investor at Istanbul stock market. “design and support ” sounds better :) ) probably it is more accurate. Yes , Netas provide design and support services for other companies,too. For your last question I dont really have any idea.

  • asefe

    Thanks zuperman. I've heard almost the same :) )

  • ronny11

    CVAS…R&D ? All architects and experienced designer in CVAS somehow left Nortel..A2E,MCS,IMS guys headed to Avaya,Broadsoft,NSN etc…kiddies A2E/MCS in Nortel Netas Turkey dealing w/t the product know…The same for CS2K Core side…Few architects left allover Nortel…If the new buyer of CVAS do not recruit back experts left CVAS then there is no future for CVAS…

  • vb_c

    Hi zuperman, Can you also predict,more or less, the completence date of due diligence for Nortel Netas?

  • wasthere

    Off subject a bit but I have to mention that Nortel(US) bonds are really up these days. Now trading at 70 cents on the dollar. Last April, same bonds were trading around 25 cents. Some investors knows things that we don't !

  • borissss

    not 1000.when you extract the Avaya Enterprise,Government solutions and the management staff,there are 600-700 CVAS employees I guess.

  • borissss

    Ericsson is not in the race for Netas.

  • heavencanwait

    But they are in the race for CVAS. I can guarantee you.

  • borissss

    Yes,I think so.Ericsson might be the best option for CVAS employees,I hope the will acquire the CVAS biz.

  • TongueInCheek

    The latest Canadian Monitor's Report is now available and is focused on the CVAS Stalking Horse agreement with Genband. Negotiations were held with 7 different firms prior to the announcement of the Genband Stalking Horse agreement.

    The proposed Auction Date is Feb 24, 2010, but this still requires court approvals.

    The report also states that there are 2,185 CVAS employees and that Genband will offer jobs to at least 1,638 of these employees. There was also some wording around Contract Assignment with NN Turkey but it's not very clear if this includes Nortel Netas.

    Perhaps NN Turkey is Nortel Netas. Can any of the readers here confirm this?

  • ex_roadtrash

    yes NN Turkey is Nortel Netas

  • asefe

    Zuperman, you are really great. Finally Ulker declared its interest with buying Nortel Netas. I remember that you said Ulker could propose $730 m. I wonder whether this amount just for 53% ???

  • asefe

    What about Avaya ??

  • borissss

    not sure but I don't think so.They have already sign a 9-month contract with Netas as an outsource supplier.It seems that Netas will be acquired by the local companies.

  • borissss

    not sure but I don't think so.They have already sign a 9-month contract with Netas as an outsource supplier.It seems that Netas will be acquired by the local companies.

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