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Nortel Networks, the Canadian telecommunications equipment manufacturer, is to be split into two product groups, each led by its own president. The reorganisation comes as Nortel struggles to recover from an accounting scandal.

Bill Owens, Nortel’s chief executive, said the reorganisation, which will create two new units, is part of an effort to “simplify our portfolio and focus our resources close to our customers.”

The new units are described as enterprise solutions and packet networks division and the mobility and converged core networks group

By creating two product groups, Nortel said it would greatly simplify its business model and be able to take advantage of cost-efficiencies by using common hardware and software systems.

Mr Owens said the new corporate structure would enable Nortel to better meet the requirements of its global business and carrier customers in the rapidly converging voice, data and video markets.

“Convergence is here and now, and our enterprise and carrier customers are demanding partners who can deliver enterprise innovation on carrier-grade platforms,” he said.

”We’re playing to win, and that means having the determination and flexibility to transform our teams, simplify our portfolio, and focus our resources close to our customers, as well as harness both the power and opportunities of network convergence.”

The new enterprise solutions and packet networks division will include Nortel’s Ethernet and enterprise telephony operations, as well as the optical and wireline data business and will be run by Steve Slattery. Nortel said Malcolm Collins who is currently president of enterprise networks, is stepping down.

The mobility and converged core networks group will consolidate the company’s mobile businesses and be combined with its core network technologies reinforcing the wireless market as a Nortel’s key revenue growth driver. The group will be run by Richard Lowe.

The reorganisation also creates four regional groups - Eurasia, North America, Greater China and Caribbean and Latin America – designed to speed Nortel’s delivery of products and services.

Nortel shares rose 2.5 per cent to $3.27 in midday trading on the New York Stock Exchange.

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