Nortel chief sees UMTS consolidation

Nortel chief Mike Zafirovski expects consolidation in the UMTS equipment business.

Nortel Networks' top executive expects a consolidation of the UMTS (Universal Mobile Telecommunications System) business but won't say whether his company will be on the buying or selling end.

"My view is that there will be some kind of industry consolidation [or] combination that will be good for the industry and good for the customers as well," Nortel President and CEO Mike Zafirovski said Monday at the JP Morgan Technology Conference, in San Francisco. Asked by JP Morgan Chase & Co. analyst Ehud Gelblum what role Nortel would play, he declined to answer.

"We're very interested in staying in that space ... but we're also being very, very realistic," Zafirovski said.

Nortel has a strong position in EV-DO (Evolution-Data Optimized), a 3G (third-generation) technology used most widely in the U.S. and South Korea, but is a runner-up in UMTS to European vendors such as Telefonaktiebolaget LM Ericsson, Siemens and Nokia. Asked about the level of competition in the UMTS market, which also includes Motorola, Zafirovski added that emerging Chinese vendors need to be counted as well.

Zafirovski voiced optimism about his ongoing overhaul of Nortel, which has struggled with poor results, scandal and financial restatements over the past several years. He took over Nortel last October, has made several top management changes, and hopes to see the company's financial tide turn by 2008.

However, those looking for an end to the repeated restatements coming from the Brampton, Ontario, company would be disappointed.

"I wish we could give you a blanket guarantee," but that's not possible, Zafirovski said.

Looking to tackle its accounting problems, Nortel has spent about US$400 million on improving its financial organization and making related system upgrades, he said.

"Right now we have double and triple checks and balances to make sure that we come as close as humanly possible to making sure it doesn't happen again," Zafirovski said.

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