ADTRAN, a leading provider of next-generation networking solutions, recently announced plans to acquire Nokia Siemens Networks’ (NSN) fixed line Broadband Access business (BBA) and associated professional services and network management solutions.
NSN has not been viewed as a success by the joint-venture partners Nokia and Siemens. It’s been well known that neither wants to invest more money in the venture and that some non-strategic assets were for sale to raise cash and achieve profitability. As such, it’s no surprise that NSN is selling the assets.
More interesting is the fact that ADTRAN is buying. ADTRAN has nearly saturated its North American Tier 1 market and needs to expand overseas to continue growing. ADTRAN has started to grow internationally in an organic manner, but it has been slow and difficult. International sales have grown to about 10% of revenues. This is the largest-ever acquisition for ADTRAN which is not an acquisition-minded company.
ADTRAN will gain access to NSN’s IP-DSLAM and multi-service access platforms (MSAP); associated intellectual property; customers throughout Europe, the Middle East, Africa and Asia; and an international sales force. In other words, ADTRAN will hit the ground running with an established product, customer base and sales infrastructure. In addition, NSN’s DSL infrastructure products are designed to appeal to international Tier 1 telecommunication companies, unlike ADTRAN’s current flagship - the Total Access 5000 - which was designed for Tier 2 and Tier 3 service providers.
According to IHS iSuppli Data, ADTRAN has more than doubled its market share since the end of 2009, from 4% to 9% at the end of Q2 2011. NSN’s Q2 market share was 2%. Together, they had about 11% share at the end of Q2, making the combined entity number 4 after Huawei (33%), ZTE (22%), and Alcatel-Lucent (15%). This deal elevates ADTRAN from a regional player to a major DSL access vendor competing with the largest multi-national companies.
ADTRAN revenues will be boosted by the acquisition in the range of $140M to $180M. NSN intends to move forward with a focus on mobile broadband.
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