A private equity firm looking to counter Nokia Siemens’ bid for Nortel Networks Corp.’s wireless assets has assembled an advisory team for the offer, led by a former Nortel executive.
MatlinPatterson Global Advisors of New York, which prepared a bid last week for the bankrupt company, has put together an advisory team comprised of telecom veterans for its bid. The team is led by Dion Joannou, former president of Nortel’s North America operations, according to FT.com.
“We have assembled a group of world-class, highly experienced industry professionals, led by Nortel veteran and former President of Nortel North America,” Dion Joannou, a MatlinPatterson spokesperson, stated in an e-mail to Network World.
Toronto-based Nortel has been operating under bankruptcy protection since January. It has lost money almost every year since 1997 and owes more than US$4 billion to bondholders. The company announced in June it was in advanced discussions to sell off its business units. Though no one has publicly announced an interest in either its enterprise or metropolitan Ethernet divisions, Nortel has an agreement to transfer its operations working on CDMA and LTE wireless to Nokia Siemens Networks for US$650 million.
MatlinPatterson is looking to counter that offer.
“Working with this team, we will propose an alternative that provides superior value and a better outcome for the company, its customers, suppliers, employees and other stakeholders,” Joannou says.
Other members of the team include Richard Burns, the former president of AT&T’s wireless network; Richard Piasentin, a former group vice president of sales at Nortel; Tony Pirih, former head of Nortel’s R&D operations; and Chris Smith, former executive vice president in charge of Alltel’s network operations, according to a report in FT.com.
MatlinPatterson is looking to reorganize and build an independent company around Nortel’s CDMA and LTE wireless assets at the core. Whether that includes other Nortel assets, such as other carrier, enterprise or services operations, is not clear at this point but possible.
But one Montreal-based analyst says this might not be good for Nortel. “Even thought it’s an experience management group, I’m just not convinced the enterprise segment is going to be persuaded (a private equity buy) will be taking care of Nortel’s destiny,” said Brownlee Thomas, principal analyst at Forrester Research Inc.
Thomas added Nortel’s biggest problem now is selling to customers who don’t know what the future holds for the company.
“The ideal (outcome) would be for more parts to be acquired by Nokia Siemens or something of that type where you’re basically looking at a straight market consolidation,” she said.
Some private equity acquisitions have worked well. Avaya Inc. of Basking Ridge, N.J., which was spun off from Lucent Technologies as an enterprise telecom vendor in 2000, was taken private in 2007.
“When Avaya went private it was a very different story than the Nortel bankruptcy and Nortel dismantling,” Thomas said. “Avaya has performed very well in that private environment but there were concerns about it when it was happening.”
Rumours surfaced weeks ago that Avaya is interested in Nortel’s enterprise assets, but neither company would comment publicly.
“Avaya would be a better fit” for buying Nortel’s enterprise unit, Thomas said.
As for Nortel’s carrier wireless business, which makes equipment using the code division multiple access and long term evolution technologies, any firm wanting to outbid Nokia Siemens Networks has until July 21 to place a bid. If this happens, a 24-hour auction will commence July 24.
Nokia Siemens Networks executives have said if they buy the carrier wireless unit, they will offer jobs to 2,500 Nortel employees, about a third of them in Canada.
“We’ve had this prolonged uncertainty around Nortel and I’m not sure it’s doing anyone any favours to prolong that uncertainty,” Thomas said.
