Verizon Wireless Awards Nortel an Expected US$2B Supply Deal
Building Network for Mobile Multimedia and Data Growth
DECEMBER 19, 2006 - BASKING RIDGE, N.J. and TORONTO - Nortel* [NYSE/TSX: NT] and Verizon Wireless, the nation’s leading wireless service provider, have signed an expected five-year, US$2 billion agreement for Nortel equipment and services that will contribute to continued improvements and expansion of Verizon Wireless’ network.
The planned Verizon Wireless network expansion comes as business and consumer adoption of services that utilize broadband networks - such as the company’s V CAST video and music services and BroadbandAccess high-speed Internet and e-mail offering - are resonating in the marketplace. With data services accounting for 14 percent of Verizon Wireless’ revenue from its nearly 57 million customers in the third quarter of 2006, Nortel’s support will be instrumental as Verizon Wireless builds upon its lead in network quality and reach in the U.S.
“The popularity of Internet services like user-generated videos, online gaming, music and video is driving an explosion in bandwidth demand,” said Richard Lowe, president, Mobility and Converged Core Networks, Nortel. “Consumers expect more from their mobile devices than voice communication and text-messaging. Nortel is making it simple for Verizon Wireless to expand its network to meet this demand and to competitively drive new services to market that their customers will enjoy.”
“This expansion underscores our focus on investing in innovative technology and leveraging long-term, strategic relationships with leaders like Nortel to continually enhance our subscribers’ mobile communication experience,” said Ed Salas, network planning vice president, Verizon Wireless. “This means true mobility for our customers, allowing them to take their PC experience with them wherever they go and enjoy things like V CAST Music, V CAST video, great mobile games and high-speed file transfers on the nation’s best wireless network.”
Under this agreement, Verizon Wireless plans to deploy additional CDMA2000 radio base stations, switching, IP platforms, optical networking solutions and related equipment with the help of professional services from Nortel. In addition, this agreement builds on the contract announced in July 2006, whereby Nortel was selected to supply Verizon Wireless with CDMA 1xEV-DO Revision A technology. The ability for CDMA networks to provide significant performance enhancements through simple upgrades is a key advantage of the underlying technology.
“This contract confirms Nortel’s leadership in supplying innovative CDMA mobile broadband technologies and driving advanced communication services,” added Lowe. “It’s our long term partners that know us best, so we’re particularly proud when an industry leader like Verizon Wireless asks us to be part of their team for another five years.”
This new agreement also presents an opportunity for Verizon Wireless and Nortel to further develop and deploy next-generation IMS-based applications and services. In addition, Nortel, Verizon Wireless and other industry suppliers will continue to work together to enhance industry standards and define an IMS architecture that lays a foundation for the efficient roll-out of advanced services.
Nortel has been a key supplier to Verizon Wireless’ nationwide network for more than a decade. Nortel has been a leader in CDMA since 1995 and has launched more CDMA networks than any other vendor, according to the CDMA Development Group.
Nortel is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world’s most critical information. Our next-generation technologies, for both service providers and enterprises, span access and core networks, support multimedia and business-critical applications, and help eliminate today’s barriers to efficiency, speed and performance by simplifying networks and connecting people with information. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at www.nortel.com. For the latest Nortel news, visit www.nortel.com/news.
Certain statements in this press release may contain words such as “could”, “expects”, “may”, “anticipates”, “believes”, “intends”, “estimates”, “targets”, “envisions”, “seeks” and other similar language and are considered forward-looking statements or information under applicable securities legislation. These statements are based on Nortel’s current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which Nortel operates. These statements are subject to important assumptions, risks and uncertainties, which are difficult to predict and the actual outcome may be materially different. Further, actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following (i) risks and uncertainties relating to Nortel’s restatements and related matters including: Nortel’s most recent restatement and two previous restatements of its financial statements and related events; the negative impact on Nortel and NNL of their most recent restatement and delay in filing their financial statements and related periodic reports; legal judgments, fines, penalties or settlements, or any substantial regulatory fines or other penalties or sanctions, related to the ongoing regulatory and criminal investigations of Nortel in the U.S. and Canada; any significant pending civil litigation actions not encompassed by Nortel’s proposed class action settlement; any substantial cash payment and/or significant dilution of Nortel’s existing equity positions resulting from the approval of its proposed class action settlement; any unsuccessful remediation of Nortel’s material weaknesses in internal control over financial reporting resulting in an inability to report Nortel’s results of operations and financial condition accurately and in a timely manner; the time required to implement Nortel’s remedial measures; Nortel’s inability to access, in its current form, its shelf registration filed with the United States Securities and Exchange Commission (SEC), and Nortel’s below investment grade credit rating and any further adverse effect on its credit rating due to Nortel’s restatements of its financial statements; any adverse affect on Nortel’s business and market price of its publicly traded securities arising from continuing negative publicity related to Nortel’s restatements; Nortel’s potential inability to attract or retain the personnel necessary to achieve its business objectives; any breach by Nortel of the continued listing requirements of the NYSE or TSX causing the NYSE and/or the TSX to commence suspension or delisting procedures; (ii) risks and uncertainties relating to Nortel’s business including: yearly and quarterly fluctuations of Nortel’s operating results; reduced demand and pricing pressures for its products due to global economic conditions, significant competition, competitive pricing practice, cautious capital spending by customers, increased industry consolidation, rapidly changing technologies, evolving industry standards, frequent new product introductions and short product life cycles, and other trends and industry characteristics affecting the telecommunications industry; the sufficiency of recently announced restructuring actions, including the potential for higher actual costs to be incurred in connection with these restructuring actions compared to the estimated costs of such actions and the ability to achieve the targeted cost savings and reductions of Nortel’s unfunded pension liability deficit; any material and adverse affects on Nortel’s performance if its expectations regarding market demand for particular products prove to be wrong or because of certain barriers in its efforts to expand internationally; any reduction in Nortel’s operating results and any related volatility in the market price of its publicly traded securities arising from any decline in its gross margin, or fluctuations in foreign currency exchange rates; any negative developments associated with Nortel’s supply contract and contract manufacturing agreements including as a result of using a sole supplier for key optical networking solutions components, and any defects or errors in Nortel’s current or planned products; any negative impact to Nortel of its failure to achieve its business transformation objectives, including completion of the sale of its UMTS access business to Alcatel-Lucent; additional valuation allowances for all or a portion of its deferred tax assets; Nortel’s failure to protect its intellectual property rights, or any adverse judgments or settlements arising out of disputes regarding intellectual property; changes in regulation of the Internet and/or other aspects of the industry; Nortel’s failure to successfully operate or integrate its strategic acquisitions, or failure to consummate or succeed with its strategic alliances; any negative effect of Nortel’s failure to evolve adequately its financial and managerial control and reporting systems and processes, manage and grow its business, or create an effective risk management strategy; and (iii) risks and uncertainties relating to Nortel’s liquidity, financing arrangements and capital including: the impact of Nortel’s most recent restatement and two previous restatements of its financial statements; any inability of Nortel to manage cash flow fluctuations to fund working capital requirements or achieve its business objectives in a timely manner or obtain additional sources of funding; high levels of debt, limitations on Nortel capitalizing on business opportunities because of support facility covenants, or on obtaining additional secured debt pursuant to the provisions of indentures governing certain of Nortel’s public debt issues and the provisions of its support facility; any increase of restricted cash requirements for Nortel if it is unable to secure alternative support for obligations arising from certain normal course business activities, or any inability of Nortel’s subsidiaries to provide it with sufficient funding; any negative effect to Nortel of the need to make larger defined benefit plans contributions in the future or exposure to customer credit risks or inability of customers to fulfill payment obligations under customer financing arrangements; any negative impact on Nortel’s ability to make future acquisitions, raise capital, issue debt and retain employees arising from stock price volatility and further declines in the market price of Nortel’s publicly traded securities, or the share consolidation resulting in a lower total market capitalization or adverse effect on the liquidity of Nortel’s common shares. For additional information with respect to certain of these and other factors, see Nortel’s Annual Report on Form10-K/A, Quarterly Reports on Form 10-Q and other securities filings with the SEC. Unless otherwise required by applicable securities laws, Nortel disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
*Nortel, the Nortel logo and the Globemark are trademarks of Nortel Networks. Use of the terms “partner” and “partnership” does not imply a legal partnership between Nortel and any other party.
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