(InfoWorld Daily via NewsEdge) Alcatel has reached a preliminary agreement to buy Nortel's 3G mobile phone network business for $320 million.
Under the terms of the proposed deal, Alcatel will acquire Nortel's UMTS radio access business, including 14 Nortel customer contracts, the companies announced.
The deal would make Alcatel one of the biggest suppliers of UMTS gear worldwide, giving it contracts with one in four UMTS operators, it said.
The companies have signed a nonbinding agreement to merge and hope to close the deal by the end of the year.
Closing the merger depends on arriving at a final acquisition agreement, negotiations with works councils, and securing regulatory and other approvals, they said.
A 'significant majority' of Nortel's employees in the UMTS division would be transferred to Alcatel, the companies said.
The deal appears not to affect Alcatel's proposed merger with Lucent, announced in April. That deal is due to be voted on by shareholders of both companies on September 7, although some Lucent shareholders opposed the deal and are trying to block the vote in court.
Alcatel said it would involve Lucent in the integration of the UMTS business.
The Nortel deal makes sense for Alcatel, since Lucent has only one major UMTS customer, Cingular Wireless, said Julien Grivolas, an analyst with Ovum in London. It would also build up Alcatel's operations in North America, he noted.
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