As part of its strategy to further strengthen its UMTS market position and expand its global leadership in broadband access, Alcatel has signed a non-binding Memorandum of Understanding (MoU) with Nortel to acquire its UMTS radio access business (UTRAN) and related assets for $320 M. The acquisition is subject to the execution of a definitive agreement and other closing conditions. The parties are targeting to complete the transaction in the fourth quarter of 2006. Alcatel has emphasised that it has and will continue to involve Lucent in the conclusion and implementation of this project in order to achieve the most efficient fit within the combined company.

The proposed acquisition would enhance Alcatel’s mobile radio expertise and product portfolio with technology and products that enjoy strong recognition among leading operators. The company also intends to benefit from significantly strengthened research and development capabilities, amongst the most advanced in the world, with the scale and know-how to lead innovation in broadband wireless access, especially in HSxPA and 3G Long-Term Evolution (3G LTE), fully leveraging its expertise in multi-standard radio solutions and software defined radio technology.

Under the transaction, Alcatel intends to acquire Nortel’s UMTS radio access technology and product portfolio, associated patents and tangible assets as well as customer contracts. It is anticipated that a significant majority of employees of Nortel’s UMTS access business will be transferred to Alcatel.