SRT gains stranglehold on rural telephony market by acquiring Lucent assets

SR Telecom Inc’s proposed acquisition of the French-based fixed wireless assets of its struggling competitor Lucent Technologies Inc would give the company a better presence in Europe and access to important European financing. The deal would also consolidate the Montreal-based company’s already dominant position in the rural telephony market giving it an additional 30 per cent market share. SR Telecom announced last week its intention to buy Lucent’s SWING division, formerly known as TRT. Under the proposed acquisition, SR Telecom would acquire all current customers, existing and active bids and other assets and become a preferred supplier of fixed wireless access products to Lucent. Price and terms of the purchase and supply contract won’t be revealed until the deal is finalized later this year. The acquisition would give SR Telecom as much as 75 per cent of the rural wireless market. Both companies use wireless technology to provide basic telecommunications to rural and remote regions around the world. SR Telecom spokesperson Yves Renaud downplays the matter of increased market share. "I think it’s going to consolidate our market share and increase it significantly, but we have some integration to accomplish between now and when due diligence is completed," he told Report on Wireless. More importantly, the acquisition would give SR Telecom a better presence in Europe and in a number of countries where it does not currently have a presence or is not active. For example, SWING has been quite active in some African and Latin American countries where SR Telecom has not entered or has had difficulty entering. These can be seen as key markets for SR Telecom as it tries to cope with a slowdown in the market. Down the road, however, access to more European markets will probably stand out as the most significant part of the deal. With SR Telecom’s foray into the urban market solidified with the release of its MetroFlex product in April and its deal with Mexican-based CLEC AXTEL last February, the company is probably looking long term at the urban market as its next growth opportunity. While there is no direct relation between the MetroFlex product and the acquisition of SWING, Renaud says the deal should help SR Telecom better market urban products such as MetroFlex in Europe. "The acquisition will allow us to more effectively position our urban product in Europe," he says. "And now that we’re going to have a more visible presence in Europe, it’s going to ease the time to market process for MetroFlex." The acquisition would not only give SR Telecom greater market share and a higher profile in certain markets, it would also give it access to unique technology that is well suited to certain regions of the world. For the most part, both SR Telecom and SWING’s products operate at the same frequencies – the 3.5 GHz and 10.5 GHz bands – but SWING has a leg up in certain markets. "(SWING) had developed a technology that is being heavily used in some countries where SR Telecom is not active," Renaud explains. "So the acquisition is going to give us access to technology that is already widely accepted in certain parts of the world." Renaud says SR Telecom executives will soon be leaving for France to begin the due diligence process. "We want to start the due diligence process pretty quickly," he says. "So we expect the confirmation of the transaction before the end of the third quarter, the end of September."

SRT gains stranglehold on rural telephony market by acquiring Lucent assets

News | 08/07/2001 4:00 am EDT

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