Nortel, Huawei Form JV
FEBRUARY 01, 2006
TORONTO -- Nortel* [NYSE/TSX: NT] and Huawei Technologies Co., Ltd. (“Huawei”) today announced they have entered into a Memorandum of Understanding (MoU) with the intent to establish a joint venture for developing ultra broadband access solutions for markets around the world. The two companies have also entered into a supply agreement that allows Nortel to immediately begin engaging customers with Huawei’s current industry-leading broadband access portfolio.
Total revenues for the global broadband access equipment market approached US$9 billion in 2005 and included a US$1 billion IP-DSLAM segment that is forecast to reach nearly US$2 billion in 2008 according to Dell'Oro Group. Huawei is ranked as the world’s number one vendor of IP-DSLAM ports for the last seven quarters and currently holds the number one and number two position for BB-DLC voice and DSL ports respectively. (Infonetics, Q3 2005)
The new company will combine Huawei’s market leading broadband access solutions with Nortel’s voice and broadband networking technologies to create a new product portfolio designed to be a leader in the industry in value and performance. These products will give service providers the ability to converge the delivery of voice, video, data and wireless services to business and residential customers onto a common IP platform that supports copper, fiber and fixed wireless networks.
The parties intend that the joint venture will be majority-owned by Nortel and headquartered in Ottawa. The joint venture will be focused on product enhancements for Huawei’s current broadband access portfolio and the development of a new ultra broadband product portfolio. This portfolio will be sold exclusively to Huawei and Nortel as channel providers.
“We believe the cooperation with Nortel, a leader in the telecommunications industry, will enable us to create greater value for our customers.” expressed Yafang Sun, chairwoman of Huawei. “The joint venture will combine Huawei and Nortel’s advanced technologies and products, to create leading broadband access solutions to meet customers’ needs. It will bring better value to our existing and potential customers.”
“Nortel is focused on seizing opportunities that will generate new revenue and expand operating margin. This joint venture is a bold opportunity to combine the strengths of Huawei and Nortel into a company that can aggressively target and win share in the rapidly expanding ultra broadband market,” said Mike Zafirovski, president and CEO, Nortel. ”This will create a powerful new player in what is a high growth market.”
Nortel and Huawei expect to complete the formation of the joint venture in the third quarter of 2006. Joint development of products has already begun, with availability expected for all markets by the third quarter of 2006.
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