Nortel, LG to establish network equipment venture

Canada’s Nortel Networks and South Korea’s LG Electronics agreed on Monday to establish a joint venture to develop and provide telecommunication network equipment, they said. The agreement comes after Nortel agreed on Friday to establish a 3G (third-generation) telecommunication equipment joint venture with China’s Putian Corp.

Nortel will own 50 percent plus one share of the proposed Korean company and LG Electronics will hold the remaining stake in the venture, establishment of which is expected to happen in the second quarter of this year, they said in a statement. Further details on the venture, including its name, capitalization and the location of its headquarters have yet to be determined, said Karen Park, a spokeswoman for LG Electronics in Seoul.

LG will contribute its telecommunication equipment business to the joint venture, including its research and development staff working on such products, said Park. The company will use Nortel’s sales channels to distribute its products worldwide.

In a statement Nortel noted a need for the company to become more competitive in the Asian market as part of its goal of becoming a global telecommunications equipment provider. A Nortel spokesperson could not be reached for additional comment.

The China deal that was announced last week will see Nortel and China Putian form a joint venture to handle research, development, manufacture and sale of 3G telecommunication equipment to customers in China. The two companies signed a joint framework agreement and expect to have a definitive agreement in place by the end of the second quarter.

The agreement, if completed, will see the two form Putian-Nortel Networks Telecommunications Equipment. The company is expected to be headquartered in the city of Wuhan and it will focus on TD-SCDMA (Time Division-Synchronous Code Division Multiple Access) and WCDMA (Wideband CDMA) systems. China Putian will hold 51 percent of the venture and Nortel will own the remaining 49 percent.