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Nortel sells carrier VoIP biz to Genband for $282 million

Carrier VoIP and Applications Solutions (CVAS) is latest Nortel asset to be liquidated

By , Network World
December 23, 2009 01:09 PM ET

Network World - Nortel is selling its Carrier VoIP and Applications Solutions business to Genband for $282 million, the latest asset to be liquidated following a failed restructuring under Chapter 11 bankruptcy.  

Nortel in '09: Dismantling of a tech stalwart

The deal is another "stalking horse" asset sale arrangement whereby Genband's offer kicks off an auction process for the Nortel operations. Nortel sold its Enterprise Solutions, Metro Ethernet Networks and CDMA and LTE wireless assets under the same arrangements.

Genband is a maker of IP media, session border and fixed mobile convergence security systems. Its products are deployed in more than two-thirds of the world’s 100 largest service providers, the company claims.

Genband's purchase price of $282 million is subject to balance sheet and other adjustments currently estimated at approximately $100 million. CVAS bids had been expected this week.  

Nortel's CVAS business includes softswitches, media gateways and SIP applications. It also includes all CVAS patents and intellectual property.

Currently, a "significant majority" of the 2,500 CVAS employees would have the opportunity to continue employment with Genband, Nortel says. Nortel expects to seek U.S. and Canadian court approvals for bidding procedures in early January, including a bid deadline and tentative auction date.

"The proposed transaction represents a clear and positive step forward for Nortel's CVAS customers, employees, and business," said Samih Elhage, president of Nortel's CVAS business, in a statement.

Nortel said it has shipped more than 118 million carrier VoIP and multimedia ports, including over 10 million SIP lines to carriers. The company also said it has secured business with 10 service providers since late 2008, and gained more than 40 carrier VoIP customers since the beginning of 2009.

Similar to the other stalking horse transactions, Nortel does not expect the company's shareholders to receive any value from the creditor protection proceedings -- the proceedings will result in the cancellation of these equity interests.

After CVAS goes, there will not be much left of Nortel. Remaining businesses and assets include its Passport multiservice switches, which address a market in decline; a majority stake in the LG-Nortel joint venture; and certain patents and intellectual property in areas such as LTE.

Read more about voip & convergence in Network World's VoIP & Convergence section.

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