Tellabs acquires Vinci

Tellabs acquired Vinci Systems, a privately-held vendor of customer premises equipment for fiber-to-the-premises (FTTP) networks, for “up to” $52.5 million in cash and restricted Tellabs stock.

The deal closed today, though Tellabs will not yet disclose how much of the total purchase price will be paid in cash and how much in stock. The $52.5-million purchase price is also contingent on performance milestones that Tellabs will not disclose.

Vinci sells optical network terminals (ONTs), the customer premises devices in an FTTP network, to equipment vendors including Advanced Fibre Communications, which Tellabs acquired this year.

A Tellabs spokesperson said Vinci’s ONT differs from AFC’s ONT in that Vinci’s is a “third-generation” product with software upgrades that allow for voice-over-IP traffic and streaming video, while AFC’s ONT does not. The Vinci product is also “more cost-effective,” she said.

Although most of Tellabs’ products have gross margins in the neighborhood of 50%, its ONT--inherited through its acquisition of AFC--yields a negative gross margin, Tellabs chief executive officer Krish Prabhu said during the company’s most recent earnings report.

Vinci’s approximately 30-person workforce will join Tellabs, the Tellabs spokesperson said, and Vinci’s founder, president and CEO, Asghar Mostafa, will report to Carl DeWilde, Tellabs’ executive vice president for access products.