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Nortel Scotches Starent Rumors

Light Reading
LR Mobile News Analysis
Light Reading
5/27/2004

Nortel Networks Ltd. (NYSE/Toronto: NT) has denied rumors it is mulling over a potential acquisition of wireless router startup Starent Networks Corp.

Both companies are already at the center of speculation over a potential link-up, following reports earlier this month that Nortel is to replace its Shasta PDSN (packet data serving node) product with kit from Starent (see Nortel Denies Shunning Shasta).

Recent mischievous postings on the Unstrung message board now suggest a full-blown acquisition could be in the cards. (Read'em here and here.)

Nortel is keen to play down such chatter. “We commonly engage in conversation with companies where there is joint interest,” says spokesman Jay Barta. "But we are not at a point of announcing any type of relationship with anyone specific."

Starent is even less effusive. “I don’t have any comment to make on rumors or speculation,” says Andy Capener, director of marketing. “It’s not something we typically talk about.”

Any potential acquisition by Nortel would have to overcome a significant stumbling block in the shape of network rival Samsung Electronics Co. Ltd. (Korea: SEC), which announced a successful partnership deal with Starent in March last year. Samsung has also invested in the startup. (See Starent Teams With Samsung, SKT Picks Samsung, Starent, and Starent Scores $25M.)

Nevertheless, a source tells Unstrung that Nortel remains likely to announce a future agreement with Starent, possibly over the use of its PDSN product within the incumbent vendor’s North American CDMA carrier customers.

— Justin Springham, Senior Editor, Europe, Unstrung

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