Nortel Networks, the Canadian telecoms equipment maker, and China’s Huawei Technologies are to set up a joint venture that will develop high-speed broadband equipment for the fast-growing internet communications market.
The new company will combine Huawei’s market- leading broadband access systems with Nortel’s expertise in voice and broadband networking technologies. The group, to be based in Ottawa, will be majority-owned by Nortel and is expected to begin operations this year.
The agreement is significant for both companies because it provides enhanced access to important growth markets where demand for converged fixed and mobile telecoms equipment is set to grow quickly.
For Huawei it will provide better access to North America. “We believe the co-operation with Nortel will enable us to create greater value for our customers,” said Sun Yafang, Huawei’s chairwoman.
For Nortel, which already sells Huawei’s broadband access gear to carriers, and recently announced a tie-up with South Korea’s LG Electronics, it moves the company back into the broadband access equipment market and fills a big hole in Nortel’s product portfolio.
It also signals the determination of Mike Zafirovski, who took over as Nortel’s chief executive in November, to reposition the Canadian company in higher-growth markets.