SR Telecom to expand market reach through proposed Netro purchase

Montreal-based SR Telecom Inc. has inked an agreement to purchase struggling U.S.-based wireless equipment maker Netro Corp. in a complicated stock deal that will see Netro shareholders own 43% of the combined entity. As part of the US$121-million deal, SR Telecom will gain control of the highly touted Angel product line as well as the AirStar line of fixed wireless access products. The acquisition is expected to close in early July 2003. Key to the agreement was that the two companies’ products don’t compete with each other and are in fact complementary, Pierre St-Arnaud, president and CEO of SR Telecom, said during a conference call. "For us, Netro represents an ideal fit," he said. The acquisition, if approved, expands SR Telecom’s addressable market into urban centres by being able to offer products operating in the 1.9 to 3.5 GHz and 10 to 39 GHz frequency ranges. Further, the company can exploit the South American market where new 3.5 GHz licences have recently been allocated. While many telecom companies have fallen victim to the telecom meltdown, it has also opened up opportunities for those that have survived it. St-Arnaud said SR Telecom has been able to benefit from the struggles of others. "The restructuring of the telecommunications industry has provided us with a number of opportunities and we have been able to capitalize on these and further strengthen our global positioning in the fixed wireless access marketplace," St-Arnaud stated. Netro’s flagship product Angel was originally developed by AT&T Wireless, but the wireless operator sold the product line more than a year ago. Netro bought Angel, the intellectual property and other assets for US$15 million, a fraction of the approximate US$1.3 billion AT&T Wireless spent developing it. Despite the promise of the technology, Netro was unable to secure any solid contracts for the product. The U.S. company noted during a conference call that there are currently five trials underway worldwide using Angel. SR Telecom has beefed up the breadth of its technology recently as part of its strategy to expand its market potential. Earlier this year, it acquired the M/ERGY CDMA 1X-EVDO product line originally developed by COM DEV International Ltd. (RoW, Jan. 20/03). Company representatives told Report on Wireless at the time that it would be better able to sell the former COM DEV product line due to its experience in the fixed wireless space (RoW, Feb. 4/03). On March 24, the company completed the acquisition of the product line and renamed it shift.

SR Telecom to expand market reach through proposed Netro purchase

News | 03/31/2003 5:00 am EST

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