Alcatel buys iMagic to conjure digital TV over DSL

Alcatel thinks it has found the final player to complete a triple play.

The Paris-headquartered telecommunication infrastructure company announced Friday it has entered into a definitive agreement to acquire iMagicTV. The Saint John, N.B.-based software company makes products that allow service providers to deliver and manage digital television and rich media services over broadband networks. The deal is expected to close in May and be worth approximately US$30 million.

Peter Merriman, director of business development, broadband entertainment for Alcatel, says the strategy behind the move was to offer more than high-speed Internet and voice.

“”If you can go to a customer with a single bill and a discount associated with bundling, those are some compelling reasons to go with that,”” Merriman says. “”What iMagic does in conjunction with Alcatel is provide a complete end-to-end solution where the telephone company can provide the customer a triple play, but the real new thing obviously is providing TV over DSL.””

Merriman says this would have been considered a pipe dream until recently. DSL technology, he says, can bring 6 Mbps to the customer, and thanks to new video encoders only 2.5 Mbps is needed for a high quality picture.

IMagicTV CEO Gerry Pond says the deal was accepted for the most obvious reason — the board and financial advisors felt that it was the best opportunity — but not because Alcatel was the only contender. While a number of companies had expressed an interest in purchasing the iMagicTV, it had already established a history and partnership with Alcatel.

Merriman says Newbridge (which Alcatel acquired in 2000) had been an early investor in iMagicTV, and over the course of the last four years have partnered on a number of deals.

“”They have a good knowledge of our company, its strategies and its strengths and weaknesses. And then if you go into the market place they are, and have been, a major business partner,”” Pond says.

Merriman says there is no integration strategy yet and they will operate on a business-as-usual basis for the time being.

“”Selling boxes in a commodity market is not the way you become very successful. We’ve reorganized and we’ve created a solutions division, and the iMagic acquisition will become part of the fixed solutions division,”” Merriman says.

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