Nokia Siemens bid for Nortel's wireless could pay off

Michael Morisy
03 Jul 2009

In light of the Nortel bankruptcy, Nokia Siemens Networks' (NSN) bid for Nortel's CDMA and LTE assets could finally allow the Nokia/Siemens joint venture to succeed at the wireless edge.

"For [Nokia Siemens], this is quite a bold move," said Akshay Sharma, research director at Gartner. "They haven't had CDMA products historically; they were not a base station vendor, but they are already in the core for Verizon Wireless's LTE rollout."

Sharma said Nokia Siemens has enjoyed most of its success at the core of telecom networks, not only with Verizon but also with numerous second-tier and regional service providers like TELUS and Bell Mobility.

With the spoils of the Nortel bankruptcy, Nokia Siemens could leverage its existing core network equipment relationships and convince carriers to go with it for next-generation network rollouts. At the very least, it will pick up Nortel's CDMA service contracts with these providers over the next several years. The company could see a tidy profit for years to come from both next-generation and last-generation wireless networks.

"Nortel announced $2 billion worth of CDMA deals alone with Verizon in December of 2006," Sharma said. "There are still lots of service and support revenues in the hundreds of millions of dollars."

The real potential for growth, however, lies in the jumpstart that the acquisition will give NSN's antenna and access business, even though Nortel's LTE offerings struggled to drum up any business.

"In North America, when you mention Chapter 11, that scares a lot of people, and I think that's what did Nortel in," Sharma said. "Under Nokia Siemens, parents who are strong financial entities, this could rebound that [Nortel] intellectual property and those products."

While Nokia Siemens' $650 million proposal for the assets is not final, analysts expected that the company would face little serious competition when bidding for the LTE and CDMA assets.

Tom Nolle, president of CIMI Corp., said Nortel had probably already discussed a possible sale to Nokia Siemens' competitors like Huawei and Ericsson and received only lower offers, if any.

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