The buyout of Lucent’s Wireless Access Solutions (WAS) division, for an undisclosed sum, includes core technology line Swing, all outstanding bids (a $55 million backlog) and current contracts, including a three-year $40 million contract with an unnamed telecommunications service provider.
Swing is a high capacity subsystem to serve voice and some data to high-density areas. The product will complement SR Telecom’s own fixed wireless solutions, said president and CEO Pierre St-Arnaud, which are designed for lower capacity.
Operating from two locations in France, WAS has about 400,000 lines in 90-plus countries. The buyout will give Montreal-based SR Telecom more than one million lines in 110 countries. The deal was financed out of existing cash reserves and will not affect SR Telecom’s debt load, said St-Arnaud.
“It . . . gives us greater access to European trade and export financing and provides us with instant access to markets where we have not been historically active,” he said.
Lucent’s WAS will provide the appropriate springboard to deliver MetroFlex, SR Telecom’s packet-based fixed wireless voice and data access system, to European service providers, added St-Arnaud. SR Telecom will also become Lucent’s preferred supplier of fixed wireless solutions.
Monday’s finalized deal was about adding value to SR Telecom, but the company could not entirely escape the pall cast over the telecommunications industry in the last year-and-a-half. SR Telecom was to have received approximately 130 employees when Lucent’s WAS changed hands, but that number has since been cut to 80 through Lucent layoffs. Half of the remaining employees are in R&D, the other half in marketing and project management.
SR Telecom itself cut 13 per cent of its workforce (125 jobs) earlier this year and shut down an R&D facility near Ottawa.
The buyout, however, is a step in the right direction for both companies, according to Yankee Group of Canada analyst Iain Grant: Lucent needs to find its focus and SR Telecom needs to make a bigger splash.
The acquisition “would give them certainly a foothold and a presence where they haven’t been before,” said Grant. “Europe is also an area which is on the forefront of wireless innovation. I think it’s important for SR to be seen on the forefront.”
In June, SR Telecom inked a $35 million five-year deal with Saudi Telecom Co. to provide phone service to 24,000 subscribers. The deal was not compromised by the terrorist attacks on the United States on Sept. 11, said St-Arnaud. “Things are advancing as planned. We don’t see any indication of changes in the relationship.”