A few months back, Nortel CEO Bill Owens spent some time Asia - an intriguing move given the company's financial woes. Clearly, he was hammering home the final details of a few deals as Nortel will enter into joint venture with state-owned China Putian Corp. and South Korea's LG Electronics.
The China Putian deal will give Nortel a front row seat to China's 3G party - whenever the government decides it will start. The agreement with LG appears to be focused on South Korea, which has one of the most developed high-speed Internet and wireless markets in the world. It's an interesting marriage because LG has been looking to sell or find a partner for its telecom equipment unit, which has been struggling apparently with declining sales and low margins. Nortel reportedly paid US$400 million to US$600-million for the privledge of joining forces with LG.
It is easy to get the feeling there is a big telecom dance happening in Asia, which is one of the few high-growth markets left in the world now that European and North American carriers have adopted a "let them come and we will build it" approach to investments in new infrastructure and services.
You get the feeling that no one (the multi-national equipment makers) want to be left without a (Asian) partner when the music finally stops. Nortel's willingness to cogh up some of its much-needed cash to hook up with LG reflects the reality iif Nortel hadn't done so, a rival such as Motorola would have happily made nice with LG.