ADTRAN Acquires Nokia Siemens Networks’ Broadband Access Business in Bargain of the Year

| Dec 14, 2011 | Fixed Access Infrastructure
| Analyst: Erik Keith

Event Summary

December 12, 2011 -- ADTRAN announced its plans to acquire, through an asset sale and purchase agreement, the Nokia Siemens Networks fixed line Broadband Access business (BBA) as well as associated professional services and network management solutions. The acquisition includes the BBA intellectual properties, technologies, and the established customer base. Up to approximately 400 people, including engineering, R&D, sales, and professional services employees, are expected to transfer to ADTRAN globally.

Quick Take

Analytical Summary

• Current Perspective: Positive on ADTRAN’s announced acquisition of Nokia Siemens Networks’ Broadband Access business (“BBA”) as well as related services and solutions, because ADTRAN has explored its options for international expansion, and already made some notable investments in building its business outside of North America, but the company has garnered limited traction to date. However, with the acquisition of NSN’s fixed line business, ADTRAN gains “instant” presence within the well-established NSN customer and market footprint, primarily (but not exclusively) within the critically important European geography. This acquisition is also highly beneficial to NSN’s customer base, given the company’s recently-announced plans to focus exclusively on mobile broadband and services (and exit all other sectors; please see: NSN’s New Formula for Success: Redefinition of Core Strategy as Mobile Broadband and Services, November 23, 2011).

• Vendor Importance: Very high to ADTRAN, which needed to take advantage of the opportunity to acquire NSN’s fixed access assets and sizeable customer base, especially at such a bargain price, or face the prospect of a continuing uphill battle to establish itself outside of North America (or the option of acquiring a less-established vendor). With the NSN acquisition, ADTRAN has effectively bought its way into the top five DSL vendors globally, as NSN still ranks fourth or fifth in terms of DSL market share according to multiple industry sources (although, with low single-digit market share, well behind the top triumvirate of Alcatel-Lucent, Huawei, and ZTE). This deal is also very important for NSN, which after many years as a comprehensive, Tier 1 telecom equipment vendor, has chosen to focus acutely on the mobile access infrastructure market.

• Market Impact: High on the overall fixed access infrastructure market, because the ADTRAN acquisition of NSN’s fixed line business means the exit of a former Tier 1 vendor from this sector, and yet another example of vendor consolidation as a function of the fixed access market’s evolution and maturity. The demise and exit of NSN from this market is a case study on the effect of Huawei and ZTE’s entry into the global market; with their aggressive pricing and (more importantly) extremely competitive products, those two vendors accelerated the evolution of the market, catalyzing both attrition and consolidation of this sector (as well as the overall service provider infrastructure market). The good news, in this case, is that ADTRAN is well-poised to benefit from NSN’s exit strategy, at an extremely low-risk cost of entry.

CLIENTS ONLY

Current Analysis Perspective

Competitive Strengths and Weaknesses

Response & Recommendations

Buyer Actions

| Client access - Full report in Fixed Access Infrastructure | More information

Share this Current Analysis Competitive Intelligence Highlight:

Top

Top