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GENBAND Takes Home Nortel Carrier VoIP Unit for $182M

By Kelly Teal
February 24, 2010 - News

GENBAND Inc. is the winning bidder for bankrupt Nortel Networks’ carrier VoIP assets – because there were no other bidders.

Companies interested in vying for the Nortel division at auction were required to submit offers by last night. But GENBAND was the only one. So, the Texas-based equipment maker will pay about $182 million after accounting for balance sheets and other adjustments from the original bid of $282 million.

For that (paltry?) price, GENBAND gets almost all of Nortel’s carrier VoIP platforms, patents, R&D work, support operations and customers. Thus, the deal looks like nothing but a good one for GENBAND. Indeed, Diane Myers, an analyst at Infonetics, said in a GENBAND-prepared release that GENBAND’s takeover of the assets “will change the face of the carrier VoIP business.”

“While Nortel CVAS’ VoIP equipment and applications solutions mesh nicely with GENBAND’s portfolio, Nortel’s installed base of digital multiplex system customers is also a golden nugget,” Myers said. “The legacy business is good fit for GENBAND since they have mastered maintaining, supporting and migrating legacy switches to the point where they are difficult to beat.”

Charles Vogt, GENBAND’s president and CEO, added the company wants to institute open standards, interfaces and interoperability thanks to the addition of Nortel’s property. That will make the transition from TDM to IP networks, and the push for fixed-mobile convergence, even easier, he said.

On the Nortel side, the sale means more money to pay back to secured creditors. And an unspecified number of carrier VoIP employees also will get to keep their jobs.

GENBAND and Nortel still need court and regulatory approvals before they close the transaction. That’s expected to happen in the second quarter.

Private equity firm One Equity Partners and other GENBAND shareholders helped GENBAND fund the deal.

Nortel has been auctioning off its divisions since declaring bankruptcy on Jan. 14, 2009.

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