Nortel Networks Corp has formed a joint venture with Shenzen, China-based Huawei Technologies Co Ltd to develop broadband access equipment that both companies hope will build sales in a market they estimate was worth $9bn in 2005.
The first products are due to be released in the third quarter of this year, and Huawei already claims to be the leader in shipments of IP-DSLAM ports.
For its part, Toronto, Canada-based Nortel will contribute its broadband networking technology, and the joint product range is designed to give service providers the ability to converge the delivery of voice, video, data, and wireless services on a common IP platform to corporate and residential customers.
The two companies said the joint venture would be focused on product enhancements for Huawei’s current broadband access portfolio and the development of a new ultra broadband product portfolio.
While Nortel said it will have a 51% stake in the joint company, which will be based in Ottawa, Canada. Details have still to be hammered out and though joint development of products has already begun, Nortel refused to reveal how many staff each side has committed to the project. Nortel, which has already signed a supply agreement to sell Huawei’s broadband products, said full details of the new company will be revealed on its formation in the third quarter.
Nortel CEO Mike Zafirovski said the joint venture was a bold opportunity to combine the strengths of Huawei and Nortel into a company that could target and win share in the rapidly expanding ultra broadband market. This will create a powerful new player in what is a high-growth market, he said.
After emerging from a revenue restatement saga last year that had exhausted executive energies, Nortel has been looking for new avenues for growth in a market made difficult by the consolidation of carriers, particularly in the US.