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NSN Misses Nortel's Key APAC Assets

Nokia Siemens set to gain from Nortel's CDMA contracts in China, but misses out in Japan and Korea

June 22, 2009

2 Min Read
NSN Misses Nortel's Key APAC Assets

Should Nokia Networks 's acquisition of Nortel Networks Ltd. 's CDMA and LTE access businesses go ahead, it'll be just as much a case of what it won't get as what it will get, when it comes to some of the key Asia/Pacific wireless network markets. (See Nortel: It's All Up for Sale and Richard Lowe, President of Carrier Networks, Nortel.)

On the plus side, Nortel has a share of China Telecom Corp. Ltd. (NYSE: CHA)'s 2G and 3G CDMA radio access business, so that would be a new area of engagement for Nokia Siemens Networks (NSN).

Nortel's share of China Telecom's 3G business is relatively small, though, with ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), Huawei Technologies Co. Ltd. , and Alcatel-Lucent (NYSE: ALU) taking the lion's share.

However, Nortel does have a CDMA2000 1x EV-DO contract for seven provinces that will help boost NSN's presence and make it the second vendor to complete the full 3G technology set (WCDMA, EV-DO, and TD-SCDMA) in China, along with AlcaLu. (See Nortel Wins CDMA Deal and AlcaLu's $1.7B China Boost.)

Nortel's public reference list for CDMA also includes a nationwide CDMA2000 1x network in Taiwan with the country's fourth ranked operator, Asia Pacific Telecom Ltd. It has also rolled out an EV-DO deployment in Taipei for the same operator, and has a wireless local loop deployment with PT Bakrie Telecom Tbk in Indonesia.

In addition, Nortel has been pushing for a share in China Mobile Communications Corp. 's LTE business and has demonstrated the TDD version of LTE in its R&D Center of Excellence in China. (See Nortel Touts LTE TDD 4G First.)

What the deal doesn't include...
Nortel's majority stake in LG-Ericsson Co. Ltd. is not included and is still being sold separately, as previously reported. (See Nortel Selling LG-Nortel Stake and Nortel Offers Up Its LG-Nortel Stake.)

The JV is a standalone and profitable business that is not part of Nortel's Chapter 11 bankruptcy protection. LG-Nortel claimed to be the first to demonstrate a live LTE handover and has development relationships with carriers in South Korea, a market NSN and its parent, Nokia Corp. (NYSE: NOK), have found difficult to penetrate. NSN could, of course, still bid separately for this business.

In addition, NSN won't benefit from Nortel's LTE success in Japan. The contract Nortel signed together with Hitachi Ltd. (NYSE: HIT; Paris: PHA) for KDDI Corp. 's LTE core network is outside the remit of the deal, which includes the radio access business but not the evolved packet core (EPC). (See Nortel Snares LTE Core Deal and KDDI Picks Nortel LTE Core.)

While that would have strengthened NSN's hand in Japan, the Finnish/German joint venture has at least already forged an LTE engagement in Japan with NTT DoCoMo Inc. (NYSE: DCM) through its partnerships with Panasonic Mobile Communications Co. Ltd. and Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY).

— Catherine Haslam, Asia Editor, Light Reading

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