Nortel-Huawei Joint Venture

Now, this is interesting news: Nortel and Huawei have signed an MOU to create a joint venture that will develop ultra-fast broadband technology. Nortel will bring its voice and broadband networking expertise, while Huawei will supply its broadband access technology (and presumably low-labour) to create products that will carry voice, video, data and wireless data to business and residential customers on one IP platform. The JV will be majority-owned by Nortel and headquartered in Ottawa. Joint development work has already started even though the JV won’t be finalized until Q3. If deal makes a lot of sense if you look at how Huawei has made such strong inroads in the telecom equipment market with low costs and attractive financing plans provided by the Chinese government. Instead of continuing to go head-to-head, Nortel CEO Mike Zafirovski has decided join ’em rather than fight ’em. If this deal – and similar JV deals such as the one with LG in South Korea – is what it takes for Nortel to thrive within the current competitve landscape, then JV away, Mr. Z. Telephony Online and The Street.com’s Scott Moritz offer up their takes on the deal. Here’s what TD Securities Chris Umiastowski said about the deal: “We think it makes a lot of sense for Nortel to partner with the world’s most relevant Chinese competitor for broadband gear. Nortel wants to win its way back into the broadband access market and Huawei would like to increase its global sales.”

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2 Responses to “Nortel-Huawei Joint Venture”

  1. Rob Hyndman Says:

    Very interesting – and a nice shot in the arm for Ottawa, too.

  2. All Nortel, All the Time » Blog Archive » Nortel Downgraded by CitiGroup Says:

    […] It appears not all analysts are ready to jump on the Nortel bandwagon. Citigroup has lowered its rating on Nortel to "hold" from "buy", while reducing its target price to $3.20 from $4. The brokerage firm said the downgrade is due to Nortel’s lack of exposure to the access equipment market (something they are trying to address through a recent joint venture signed with Huawei) and slightly higher cost estimates because of delays in the transfer of manufacturing operations to Flextronics International. Citigroup also believes new CEO Mike Zafirovski may want to re-evaluate Nortel’s restructuring plans.  The Globe & Mail has a story about how Mike Z. has been bolstering his executive team over the past few months by tapping former GE colleagues. […]

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