Alcatel to Buy Nortel 3G Unit

Alcatel (ALA Quote) signed a nonbinding memorandum of understanding to buy Nortel's (NT Quote) wireless network infrastructure business for $320 million.

Paris-based Alcatel, which is in the process of buying Nortel rival Lucent (LU Quote), said it will acquire Nortel's universal mobile telecommunications, or UMTS, radio access business. The deal will help Alcatel "expand its global leadership in broadband access."

A significant majority of employees of Toronto-based Nortel's UMTS access business will be transferred to Alcatel. Following the transaction, Alcatel would serve an additional 14 UMTS customers around the world for a combined global footprint that amounts to one in four UMTS operators.

The news comes just a month after reports of a deal in the so-called third-generation wireless gear area surfaced. Third-generation, or 3G, wireless networks enable features like email and Web browsing.

"This deal will be a win-win for both companies and our customers," said Richard Lowe, president, Mobility and Converged Core Networks, Nortel.