Nortel Sells Carrier VoIP Unit for $282 Million

by Sean Michael Kerner

Genband emerges the winner of Nortel's Carrier VoIP and Application Solutions (CVAS) business, without going to auction.

Nortel is selling its Carrier VoIP and Application Solutions (CVAS) business in a deal with IP gateway vendor Genband worth $282 million.

Unlike the other business units that Nortel has sold off over the last year, the CVAS unit sale did not go through a court-appointed auction.

Nortel entered into bankruptcy protection in January 2009 and has been selling off its business units ever since. At the end of December, Genband made an initial "stalking horse" bid that had been intended to set the floor price for an auction of the CVAS business. In each of the previous unit sales, the stalking horse bid had been followed by an auction to determine the final winner, but that did not happen with the CVAS business.

"We did not have an auction because there were no other 'qualified bids," Nortel spokesperson Jamie Moody told InternetNews.com. "To be clear, we did have other parties interested, but they did not produce a qualified bid."

Genband's initial bid totaled $282 million, though after all is said and done, it'll actually be shelling out far less. Nortel estimates that balance sheet and other adjustments will total about $100 million, leading to a final net purchase price of approximately $182 million.

As part of the purchase, Genband will acquire Nortel's softswitching, gateways, SIP applications, and TDM products and services related to the CVAS business. Current Nortel CVAS customer contracts will also move to Genband as a result of the deal.

The next step in the deal is bankruptcy court approval, which Nortel will seek in a hearing on March 3.

The CVAS sale follows other major Nortel divestitures in 2009. Nortel's enterprise unit, which includes unified communications for enterprises businesses, was sold to Avaya for $900 million, with Nortel's carrier wireless assets being sold to Ericsson for $1.13 billion.

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.

This article was originally published on Wednesday Feb 24th 2010