Europe France : Alcatel has signed a non-binding Memorandum of Understanding with Nortel to acquire its UMTS radio access business (UTRAN) and related assets for USD 320 million.

Inset is Alcatel's Marc Rouanne quoted below.

This is a key step in Alcatel's strategy to further strengthen its UMTS market position, and thus expand its global leadership in broadband access.

With this deal, Alcatel should become one of the world's largest suppliers of UMTS radio access solutions, and further reinforce its technology edge at a time when the UMTS market is expanding rapidly. The proposed acquisition would enhance Alcatel's industry-leading mobile radio expertise and product portfolio with technology and products that enjoy strong recognition among leading operators such as the Vodafone and Orange groups. Alcatel also intends to benefit from significantly strengthened research and development capabilities, amongst the most advanced in the world, with the scale and know-how to lead innovation in broadband wireless access, especially in HSxPA and 3G Long-Term Evolution (3G LTE), fully leveraging Alcatel's expertise in multi-standard radio solutions and Software Defined Radio (SDR) technology.

Under the transaction, Alcatel intends to acquire Nortel's UMTS radio access technology and product portfolio, associated patents and tangible assets as well as customer contracts. It is anticipated that a significant majority of employees of Nortel's UMTS access business, will be transferred to Alcatel.

Following the transaction, Alcatel would serve an additional fourteen UMTS customers around the world for a combined global footprint that amounts to one in four UMTS operators. Alcatel would also significantly reinforce its presence with Tier-1 operators, especially in world-leading 3G markets such as South Korea, Italy, Spain, France, and the UK. While strengthening its presence in developed mobile markets, the transaction would also put Alcatel in a unique position to serve the needs of major upcoming 3G markets, such as China and other key fast-growing regions, where the company already enjoys a strong GSM/EDGE footprint.

"The expertise of Nortel's UMTS team is well-known. I am confident that the scale resulting from our combined forces (including those of Lucent, pending the conclusion of the merger) will pave the way for further success in the wireless market. We are clearly poised to become a strong number 3 in UMTS and HSxPA," said Marc Rouanne, President of Alcatel's mobile communications activities. "Combined with our strong GSM/EDGE position, our early leadership in WiMAX and our strong commitment to LTE, this acquisition will add further momentum to Alcatel's broadband wireless access strategy. Through the contemplated merger with Lucent, the combined company will also enjoy a leading position in CDMA EV-DO, including a clear commitment to Rev C, thus offering the most comprehensive and innovative wireless access portfolio in the industry", he added. "Together with our long-standing leadership in DSL, it makes us the partner of choice to assist our customers in their network transformation towards seamless broadband."

"This deal will be a win-win for both companies and our customers," said Richard Lowe, president, Mobility and Converged Core Networks, Nortel. "We will work closely with our UMTS access customers during the planned transition to make it as seamless as possible and will continue to provide the best support for other Nortel solutions deployed in their networks."

The acquisition is subject to the execution of a definitive agreement and other closing conditions. The parties are targeting to complete the transaction in the fourth quarter of 2006.

Alcatel has and will continue to involve Lucent in the conclusion and implementation of this project in order to achieve the most efficient fit within the combined company.

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