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Genband grabs Nortel VoIP unit for $182m

Alex Scroxton
Nortel has abandoned the auction of its profitable carrier VoIP and application solutions (CVAS) unit, selling the business to Texas-based Genband for $100m less than it had hoped.

The sale of the CVAS business - one of the last remaining significant Nortel assets - was announced in December 2009 and was set to go to auction, but it is understood that no other qualified bidders emerged.

Genband was set to buy the CVAS unit for $282m, but adjustments mean that the net price is now a paltry $182m, a fraction of the $800m sales generated by the business in 2008.

The CVAS business was consistently highly placed at the top of the global carrier VoIP market, with deployments in 16 out of the top 20 global carriers by IDC's reckoning.

The bargain basement price will come as a bitter disappointment to Nortel and its creditors, which had hoped to generate more cash from the sale. The firm has now made over $3bn from various asset sales, but this is under 50% of annual sales for 2008.

Canadian media has reported that over 1,600 Nortel employees will be hired by privately-owned Genband, whose CEO Charles Vogt yesterday heralded the creation of the "industry's most comprehensive carrier VoIP portfolio".

"This move will put Genband in a unique position to cost-effectively transform today's legacy switching infrastructure ... we look forward to integrating Nortel's CVAS products and welcoming their employees," he added.

The sale is expected to close during Q2.

Meanwhile, the UK pensions regulator is attempting to file a claim of up to £2.1bn on Nortel's assets to cover a shortfall in the pensions of over 40,000 Britons.

Nortel is understood to be attempting to block the claim, which the regulators must make stand up in a Canadian court. Its authority outside the UK is legally untested.

The clash also puts British pension-holders at loggerheads with members of the Canadian scheme, who are also trying to recover their money.

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