TORONTO-Northern Telecom Ltd. completed the purchase of Broadband Networks Inc. for $414.6 million, a large portion of which consists of research and development operations, Nortel said.
Nortel funded the acquisition with about $148.9 million in cash and 5.6 million shares of common stock. Nortel said it plans to charge about 90 percent of the total purchase price for Broadband’s R&D operations to its earnings this year, resulting in significant non-cash charges against its 1998 earnings.
Nortel now will be able to offer a full suite of networking products for the local multipoint distribution system market, including its asynchronous transfer mode switching systems and point-to-multipoint radio systems, the company said.
Broadband will operate as a separate business unit within Nortel’s Wireless Networks, and the company’s former president and chief executive officer, David Graves, will become group vice president and general manager of the new Broadband Wireless Access unit.
“The enhanced product line should be attractive to successful bidders in the FCC’s upcoming LMDS auction in February,” said Matt Desch, president of Wireless Networks for Nortel.
“With the completion of the purchase, we can expand our product line for carriers wanting to break into local networks around the world, particularly in Canada, Europe and Latin America.”
