Nortel's bankruptcy an opportunity for "industry rebalancing"

Nortel's bankruptcy filing will spur a new wave of competition in the telecommunications industry, according to Ovum.

Nortel’s bankruptcy filing will give the telecoms industry an opportunity for rebalancing, says analyst firm Ovum.

Nortel last week filed for credit protection following several attempts at restructure to stave off economic worries.

The filing will have not have an immediate impact on the telecoms industry, as “Nortel’s downwards spiral has been gradual and bankruptcy restructurings take time”, Ovum analysts Dana Cooperson and Matt Walker said.

There is a possibility that Nortel will emerge from its bankruptcy as a slimmer, more competitive version of itself in the near future, the analysts said. However, it’s more likely that rivals will pick at the remnants of Nortel’s businesses, filling the gaps in their product and service lines.

"In Nortel’s bankruptcy lies the opportunity for broader industry rebalancing," the analysts said.

Specifically, Ovum expects companies looking for a slice of Cisco’s data networking business to snap up the remnants of Nortel’s Enterprise and Metro Ethernet Networks (MEN) units.

“Juniper, Tellabs and Ciena would benefit from looking carefully at Nortel. All have some experience with growth through mergers and acquisitions, and have geographic and cultural similarities,” the analysts said.

Networking vendors may also consider acquiring Nortel’s 40G/100G business and its LTE/SAE business.

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