Nortel: GENBAND Ready to Buy Carrier VoIP Assets

Bankrupt Nortel Networks is on the verge of auctioning off another of its divisions. This time, it’s the carrier VoIP unit and the related technology and intellectual property, for which Nortel earlier this month earned top supplier rankings among analyst firms.

Texas-based GENBAND Inc. has emerged as the “stalking horse,” or opening, bidder for the assets, with an initial bid of $282 million. That’s one of the lowest – if not the lowest – offers so far for Nortel properties.

Nortel won’t try to get court approvals for competing-bid deadlines or an auction date until after the holidays.

If GENBAND wins the auction, the company expects to take on a total cost of ownership of more than $400 million. GENBAND executives want to combine their access, trunking, session and security gateway products with Nortel’s softswitches, gateways and SIP applications. Then, they want to institute open standards and promote interoperability among platforms. All in all, that would give service providers around the world a comprehensive VoIP portfolio, they say.

“We believe our vision behind this acquisition is aligned with the industry’s desired evolution path to IP,” Charles Vogt, CEO of GENBAND, said in a prepared statement. “This transaction … represents an opportunity to fuel affordable network migration to cutting-edge VoIP technology.”

GENBAND, if it beats out rivals, will have bought almost all of Nortel’s carrier VoIP assets in North America, the Caribbean and Latin America, Asia, Europe, the Middle East and Africa. Some of those areas overlap with GENBAND’s office locations, another reason the two companies will make a good fit, GENBAND said. And, if GENBAND does land Nortel’s carrier VoIP properties, it will expand operations in Canada and North Carolina. That’s because GENBAND expects “to make employment offers to a significant majority” of Nortel’s carrier VoIP employees, Vogt said.

GENBAND has secured financial commitment from one of its shareholders, One Equity Partners, to help it land Nortel’s carrier VoIP division. One Equity Partners is part of JPMorgan Chase & Co. and, in November, tried to help Nokia Siemens Networks buy Nortel’s Metro Ethernet Networks unit. Ciena Corp., however, won that highly contested auction.

As with Nortel’s previous division auctions, shareholders won’t benefit from the sale.

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