Summary:

A private equity firm will pick up the optical business for an undisclosed amount, relieving NSN of one its last remaining ties to wireline networking. NSN’s focus on 4G appears to paying off. In the last year, it’s won key contracts and turned record profits.

digital data flow through optical wire

Telecom equipment maker Nokia Siemens Networks is shedding one of its last ties to wireline networking as part of its strategy to become a 4G specialist. On Monday, the vendor announced it is selling its optical networking business to Marlin Equity Partners, a Los Angeles-based private equity outfit, for an undisclosed sum.

NSN revealed its plans to become a lean, mean 4G machine last November, when it announced a restructuring plan involving 17,000 job cuts and the shedding of any business unit unrelated to its core mobile broadband strategy. It quickly sold off its wireline access business to Adtran and its mobile backhaul unit to DragonWave. NSN’s carrier business support systems (BSS) software division is also rumored to be on the auction block with both Ericsson and Amdocs as potential bidders.

NSN, however, chose to hold onto its optical business, saying it fit with its 4G goals, but it now appears to have changed its mind. Here’s Ovum network infrastructure analyst Dana Cooperson’s take:

“When Nokia Siemens Networks announced its updated strategy about a year ago it said it was focusing its business on mobile broadband but needed to keep its optical group as a complement. This struck Ovum as odd: its strongest position in optical (it’s ranked 10th globally in the $14.9B market with just under $500M annual sales) is in the network core, where there is little connection with MBB. Furthermore, NSN’s optical business has been slipping for years with no clear plan to improve; it has not done the kind of fundamental R&D that its main competitors (e.g., Alcatel-Lucent, Ciena, Cisco Systems, Huawei Technologies) are doing.”

It’s unclear what a private equity firm will do with a global optical equipment unit, but Cooperson said Marlin’s goal may just be to flip the business over to one of NSN’s competitors, possibly Juniper Networks.

NSN 4G focus, however, appears to paying dividends. At the time of its restructuring announcement, NSN had just acquired Motorola’s commercial networks businesses, it was running short of operating cash, and it had missed out on some of the initial major LTE contracts. But in the last year it has emerged as a big 4G contender, winning key carrier deals in Asia and posting record profits in the third quarter.

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