US vendor Adtran buys NSN’s fixed-line broadband access business for an undisclosed fee. Guy Daniels reports.
After announcing a major business restructuring and job cutting programme last month, troubled vendor Nokia Siemens Networks has managed to free itself of an unwelcome part of its portfolio. NSN’s fixed line Broadband Access business and associated professional services and network management solutions will be acquired by Adtran through an asset sale and purchase agreement, although the value was not disclosed. In addition, around 400 NSN staff, including engineering, R&D, sales and professional services employees, are expected to transfer to Adtran. The deal is expected to close by the end of April 2012, subject to the usual corporate requirements being satisified.
Alabama-based Adtran provides next-generation networking solutions, primarily to the US carrier community, and sees the acquisition as a way to gain more global recognition. CEO Tom Stanton said:
“This strategic acquisition would position Adtran in key markets with an established customer base; complementary market-focused products; along with engineering, R&D, sales and professional services resources that will enable Adtran to take a significant step forward as one of the world’s leading communications solutions providers.”
For its part, NSN must just be glad to divest itself of an unwanted element of its new business strategy. Having endured a rough time from price-competitive Huawei and ZTE, NSN decided a serious rethink was required.
Back in September it announced that Nokia and Siemens would each pony up an extra €500 million to keep it going as it suffered a continuing sales dip. A quarterly increase in net sales was completely down to revenues provided by the recently-acquired Motorola Solutions.
And so at the end of November, NSN CEO Rajeev Suri said he wanted to realign the business to focus on mobile broadband, customer experience management and services. He also announced plans to cut its workforce by 23 per cent to 57,000 by the end of 2013, as it sought to reduce costs by €1 billion.
As well as identifying its ‘lead’ businesses (i.e. mobile broadband, customer experience management and services), NSN also identified its ‘exit or maintain’ list – which covered broadband access, fixed-line VoIP, WiMAX, Carrier Ethernet, BSS and Communications and Entertainment Solutions. One down; five to go. Marc Rouanne, head of Mobile Broadband at NSN said of the Adtran deal:
“The planned sale is in line with our new strategy to increase our focus on the mobile broadband and services market. We believe that this planned divestment would provide our existing fixed broadband access customers with a continuous high-quality service from a company focused on their needs.”
During a conference call to discuss further details, an Adtran spokesperson said the deal would boost annual sales by up to $180 million. Adtran's sales have risen 23 percent in the nine months to September to $541.9 million, with net profit of $107 million. Its shares dropped 6.7 per cent on the news.
Earlier this month, at an Adtran analyst conference, held in the company’s home town of Huntsville, Alabama, CEO Stanton said:
“We make a good product, but people don’t know about us.”
Whether NSN can successfully execute the rest of its strategy and refocus its business to maintain its tier one ranking still remains to be seen.
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