Alcatel To Buy Nortel's UMTS Access Business

The deal gives the French equipment provider, which is expected to seal a merger deal with Lucent Technologies next week, another 14 UMTS operator customers.

Alcatel (Paris, France) said it expects that a "significant majority" of employees of Nortel's UMTS access business will be transferred to Alcatel.

"The expertise of Nortel's UMTS team is well-known, and I am confident that our combined forces will pave the way for further success in the wireless market," said Marc Rouanne, president of Alcatel's mobile communications activities.

Once the deal is finalized, expected in the fourth quarter of the year, Alcatel will become third in the global market for UMTS, after Ericsson and Nokia.

Nortel president and CEO Mike Zafirovski said that the sale of the UMTS business to Alcatel means that Nortel has segmented off a portion of 3G networks as an area in which Nortel cannot compete effectively.

The company maintains a strong position in 2G, he said, is pursuing CDMA opportunities in 3G, and has a strong base in relevant 4G technologies such as OFDM, MIMO antennas, and WiMax.

The developers working on UMTS were relatively focused just on base transceiver stations and controllers for that market alone, he said, while other teams in Ottawa were working on Rev. C base stations, WiMax, and Long-Term Evolution technology.

"We did not see a way to have any reasonable returns on UMTS on a short-term basis, and saw Alcatel's prospects for this market as much better," Zafirovski said. "However, we have every intention of retaining our core expertise in Rev. C, OFDM, and MIMO."

Richard Lowe, president of Nortel's mobility and converged core networks group, said that when an existing product has multiple applications, Nortel will continue to offer it in non-UMTS markets.

For example, the 18000 base transceiver station designed for both GSM and UMTS, will continue to be sold by Nortel for GSM networks.

The Memorandum of Understanding the companies signed Friday (Sept.1) envisages the sale of all the UMTS access product portfolio, made up of the Radio Network Controller and Node B products and OAM solutions, related services and associated assets.

Lowe added Nortel is "absolutely committed to mobility and plan to lead the 4G evolution and play a key role in the mass market adoption of mobile video and multimedia services."

Loring Wirbel contributed to this story