Genband To Buy Nortel VoIP Unit For $182 Million - InformationWeek

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Government // Mobile & Wireless

Genband To Buy Nortel VoIP Unit For $182 Million

Nortel's VOIP unit is the networking equipment company's last remaining business operation.

The fat lady is finally singing at Nortel Networks. Having sold off most of its business units since filing for financial restructuring more than a year ago, Nortel has agreed to sell its last remaining operation, its VoIP equipment unit, to Genband for $182 million.

The auction failed to attract any other bids, paving the way for Texas-based Genband to acquire the operation. Genband is a relatively small company, but said it plans to retain more than 2,000 Nortel employees.

The two firms have had a partnership for nearly three years. They have been working together to offer migration solutions to carriers moving from legacy TDM voice switches to VoIP. The Nortel VoIP and applications operation generated revenue of $208 million in the third quarter of 2009.

"By melding these market-leading technologies into Genband, we will create the most comprehensive, standards-based switching portfolio in the world," said Genband's president and CEO Charles Vogt in a statement. Genband will inherit a sizable Nortel customer base including Verizon Communications, France Telecom, and BT Group PLC.

Also involved in the deal is Genband shareholder One Equity Partners, which manages some investments for JPMorgan Chase & Co., according to media reports.

Once the largest Canadian company by stock market valuation, Nortel Networks got caught in the downdraft that pulled many networking equipment companies into a financially unprofitable abyss.

Nortel's president and CEO Mike Zafirovski resigned abruptly along with five other board directors of the firm, in August 2009, after the company posted a loss of $274 million.

The company has been selling of its crown jewels one at a time -- its LTE/CDMA unit to Ericsson for $1.3 billion and its Nortel Enterprise Solutions unit to Avaya for $900 million.

Final sale of the unit requires approval by Canadian and U.S. courts. The closing date is expected to take place in the second quarter, Nortel officials said.

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