Genband’s Mehmet Balos on Nortel bid

Genband’s stalking-horse bid for Nortel Networks’ carrier VoIP business is only the latest move to acquire major-vendor assets in Genband’s 10-year history. But the deal could give Genband, whose VoIP gear is already sold by heavyweights from Alcatel-Lucent to Nokia Siemens, a more direct line to major service providers. Genband, which today employs 400 people, says it will offer jobs to most of the 2200 Nortel employees involved. Genband’s chief marketing officer, Mehmet Balos, spoke with Connected Planet about the implications of the proposed deal. An auction date will likely be announced in January.

On direct and indirect channels: We already have access to two thirds of the top 100 carriers worldwide through our OEM partners. Nortel goes there mostly directly. This opens up an opportunity to execute our go-to-market model either through suppliers or through Nortel’s customer base. We already have a direct touch salesforce in certain areas, especially North America.

On tier-two and tier-three markets: We already have Nortel as our go-to-market partner. They sold our small to medium gateways to tier-two and tier-three [carriers]. We’ve established a relationship and a knowledge base between the two. They have the leading CS2000 voice softswitch for Class 4 and Class 5 applications. You have the NG9000 or the CS15000 for Class 4, which we have but for other customers, so that will bring an additional available market for us, either with the embedded base or other service providers we haven’t tapped yet. Sometimes independents – tier twos and tier threes -- use our media gateway with [Nortel’s] softswitch already. They have a pretty strong position in the tier twos and tier threes. That’s our origination as well, 10 years ago. In certain accounts we complement each other, in other accounts we’ve competed. This will bring their customers to us and merge them. They have large and medium softswitches. We have a softswitch that’s been utilized in different sizes.

On rationalizing products: I don’t expect to do any discontinuation of products. In every company’s product portfolio, there’s a life cycle – development, maturity and decline. When those things happen, we’ll be looking at the places we should be investing. For established customers, generally it takes years for them to replace [softswitches]. [Nortel] announced the CS2000, the market-leading softswitch, on an ATCA platform. That’s in the final stages of development. We’ll be looking into continuing development of that. We already have an ATCA platform for our SBC security gateway, so our philosophy has been similar. We have our Packet Line gateway, you can upgrade your softswitch to our media gateway and extend the lifespan of those without touching the line cards.

On the gap between Nortel’s reported purchase price -- $282 million (subject to a possible $100-million adjustment) and Genband’s “total cost” in excess of $400 million: $400 million includes the purchase price, required working capital, infrastructure costs, transitional services cost -- you have to nourish the IT, forecast and inventory systems. There’s taxes, legal fees, banking fees and all that. $282 million is the purchase price.