June 9, 2006

Nortel Networks Ltd. cancelled its joint venture with Huawei Technologies Co. that was supposed to develop high-speed broadband access equipment.

The Canadian vendor quietly filed a 10-Q statement with the Securities and Exchange Commission earlier this week detailing the break-up.

The joint venture was announced in February and promised to combine Nortel’s established relationship with operators around the world with Huawei’s low-cost gear, similar to Nortel’s ongoing arrangement with South Korea’s LG Electronics Co. Ltd.

Dubbed LG Nortel Co., this joint venture brought in more than $50 million for Nortel during the first quarter.

Nortel’s joint venture with Huawei was to be based in Ottawa, with Nortel owing a majority of the company. The JV was to have resold Huawei’s products.

Nortel said in an e-mail that, “On Nov. 9, 2005, we and Huawei Technologies Co. Ltd. entered into a non-binding Memorandum of Understanding to establish a joint venture for developing ultra broadband access solutions.

We and Huawei have now decided not to proceed with a joint venture.

The parties are continuing discussions to define the nature that any ongoing alliance or relationship may take.

An alliance or relationship, if any, would still be subject to negotiation, execution of definitive agreements and customary regulatory approvals.”

Huawei could not be reached for comment.

Source: RCR