Nortel’s fire sale continues – Texas firm makes a bid for its VoIP business

Posted Dec. 24, 2009 at 7:55 a.m.

Nortel’s fire sale continues – Texas firm makes a bid for its VoIP business

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RESEARCH TRIANGLE PARK, N.C. – Bankrupt Nortel’s liquidation fire sale continues.

On Wednesday, the telecommunications gear maker said it had agreed to a “stalking horse” bid of $282 million from Texas-based Genband for its voice over Internet Protocol (VOIP) business.

The agreement makes Genband the lead in a still-to-be scheduled auction with the right to top other bids.

Nortel, which declared bankruptcy in January, is in the process of liquidating its assets.

(Click here for other news - on Wednesday, Nortel also resolved an IRS dispute and settled some internal funding claims.)

“As believers in next generation networking, our aim will also be to empower service providers and their partners to use a range of leading softswitch solutions to interoperate with Nortel’s installed base without having to discard existing infrastructure,” said GenBand Chief Executive Officer Charlie Vogt in a letter to Nortel employees.. “Our vision behind this proposed acquisition is to continue expanding a market approach to open standards, interoperability and best-in-class products.”

Nortel's assets in North America, the Caribbean, Latin America and Asia are being offered in the deal. The company said "a significant majority" of the division's employees will have the opportunity to work for Genband.

Genband Inc., based in Plano, Texas, is a provider of Internet protocol multimedia and infrastructure products.
Commenting on the announcement, Samih Elhage, President of Nortel's CVAS business said:

"The proposed transaction represents a clear and positive step forward for Nortel's CVAS customers, employees, and business,” said Samih Elhage, president of the Nortel VoIP group. “Today's announcement is a strong endorsement of our continued leadership in the Carrier VoIP market where we have held the No. 1 position since 2002."

“Throughout this process, Nortel will remain focused on providing our customers the highest level of service, support and responsiveness that they have come to expect from our team,” he added. “Today's news is also a testament to our employees, whose commitment to innovation and customer support has ensured our growth in market share in 2009 despite a challenging economy."

Despite its bankruptcy woes, Nortel added more than 40 network carriers as VoIP customers in 2009, according to the company. Nortel also has won contracts with 10 service providers over the past two years.

Nortel employs some 1,300 people at its campus in RTP.

(The Associated Press contributed to this report.)

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