NSN takes its optical unit private

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The deal: Nokia Siemens Networks (NSN) in December 2012 sold its Optical Networks business to Marlin Equity Partners, establishing the business as a privately-owned optical vendor.

Similar to the sale of its access network division to ADTRAN (Nasdaq: ADTN) in December 2011, the sale of its optical unit is part of the Finland-based company's move to broaden its mobile broadband focus.

Rajiv Suri, NSN's CEO, told Bloomberg last February during the Mobile World Congress wireless show in Barcelona that it planned to shed more elements of its company that weren't related to mobile broadband.

NSN is not alone in shedding off non-core mobile assets. Fellow wireless vendor Ericsson (Nasdaq: ERIC) sold its last mile access business to Calix (NYSE: CALX).

To maintain consistency, Marlin will leave the existing management team will remain in place. The new privately-owned company will be run by Herbert Merz, who was head of optical networks for Nokia Siemens Networks (NSN), nominated as its CEO.

Why it's significant: What will be interesting to see over time is what Marlin actually plans to do with NSN's optical unit.

One possibility that analysts floated around when the deal went down is that Marlin could sell the unit to another vendor such as Juniper Networks. Such a sale would not be completely out of question as Juniper and NSN have run a joint venture called Carrier Ethernet Solutions since 2009, providing solutions for the Carrier Ethernet Transport market. Earlier, the pair launched IPoverWDM collaboration in June 2009 to create router interfaces to optical networking equipment and components.

"Marlin's goal may be to sell the optical business to another vendor, for example Juniper Networks," said Dana Cooperson, leader of Ovum's Network Infrastructure Telecoms practice, in a report at the time the Marlin announced its deal to acquire NSN's optical business.

Another scenario is that NSN's optical competitors, which in recent years have commanded the rapidly consolidating optical business segment, could play up the sale as a weakness to lure them to purchase equipment.

While NSN has been gaining some new traction in the optical industry with new deals with XO Communications and TeliaSonera, particularly in the 100G optical segment, they have clearly trailed the likes of Alcatel-Lucent (NYSE: ALU), Ciena (Nasdaq: CIEN), Cisco Systems (Nasdaq: CSCO), Huawei, and Infinera (Nasdaq: INFN).

These competitors have consistently gained traction in large carrier accounts, including CenturyLink (NYSE: CTL), China Telecom (NYSE: CHA), and Comcast (Nasdaq: CMCSA).

"Competitors will take advantage of this ownership change and related confusion to gain any advantage in NSN's accounts," Cooperson said.

NSN's ongoing bargain basement sale has not ended with the optical business, however. In October, NSN reached a deal to sell its IPTV software business to Accenture, while it has not found a suitor yet for its OSS/BSS business.