ADTRAN buys NSN's wireline broadband unit

Tools

Top M&As 2011Deal size: Undisclosed

Why it's relevant? Having made a well-established name for itself in the Tier 1 domestic telecom service provider market, ADTRAN's (Nasdaq: ADTN) move to acquire Nokia Siemens Networks' (NSN) fixed line broadband access business (BBA) not only enables ADTRAN to expand its product and professional services capabilities, but also deepen its international reach. 

Broadband access has continued to be a strong sales performer in ADTRAN's carrier division. In Q3 2011, its broadband access segment grew 93 percent over Q3 2010.

Upon completion of the acquisition, which the two companies expect by the end of April 2012, up to 400 people, including engineering, R&D, sales and professional services, will become part of ADTRAN's global workforce. In addition, ADTRAN's solutions will be incorporated by NSN into its customer propositions.

While the move clearly represents NSN's increased focus on the mobile wireless market, the deal has a number of implications for ADTRAN.

The acquisition of NSN's BBA unit instantly enhances its professional services power, something that's helped it win not only large domestic Tier 1, but also build its growing base of Tier 2-3 ILEC customers. In addition, ADTRAN instantly gains an even larger set of resources to advance its growing international customer base, which has been cited by the company's leadership as a key focus area in 2012.  

To date, ADTRAN has made progress in the international market, winning deals with the likes of Korea Telecom, Telmex and Telstra (ASX: TLS.AX). By purchasing NSN's broadband unit, it will gain increased customer presence in Europe, the Middle East, Africa, India, Russia and Asia-Pacific.

"It's a smart move on ADTRAN's part as it gives the company a much smoother entry into Europe and other ETSI markets, where they lack a well-established presence (with some exceptions, such as Australia)," said Erik Keith, principal analyst, Fixed Access Infrastructure for Current Analysis in an interview with FierceTelecom. "Also, there is a lot of commonality between ADTRAN and the former Siemens fixed access business, i.e., providing legacy TDM/ATM copper connections for both residential and business applications, with both companies having migrated their operator customers to IP/Ethernet solutions (ADTRAN has been more successful in this regard)."

Still, Keith cautions that the main challenge ADTRAN will have in bringing NSN's broadband division into its fold lies with its ability to successfully integrate people into its work structure. 

"The main obstacle to the success of this acquisition is the potential culture clash (which Nokia and Siemens experienced themselves with the joint venture)," he said. "However, ADTRAN already has a reasonably solid footing in terms of European-focused sales. Integrating the 400 NSN employees, as well as leveraging NSN's fixed access technology, will be key factors for ADTRAN moving forward."