Nortel Networks to sell fraud business

After four years in the fraud and revenue-assurance software business, Nortel Networks (www.nortelnetworks.com) has announced the pending sale of the business. Jay Barta, a Nortel Networks spokesman, said the move is part of the company’s plan to shed non-core operations and focus on its core business of providing network infrastructure. Barta also noted that the company informed its customers of the existing sale before the announcement was made.

Under the announced agreement, Argo II – The Internet Fund (www.argoglobal.com) will acquire Nortel Networks Fraud Solutions while maintaining an OEM relationship with Nortel Networks. The resulting fraud software company will be named Cerebrus Solutions, after the core Nortel Networks product CerebrusRE.

CerebrusRE is designed to use artificial intelligence to detect fraud and update itself based on network information, so that it can detect emerging fraud types.

“We think the move will be of great benefit to the fraud solutions group and the Cerebrus product line,” Barta said. “We think it provides more of a strategic opportunity for the fraud group, to enable them to serve both their existing customer base and also extend their customer base.”

The plan includes Faz Hussain, the general manager of Nortel Networks Fraud Solutions, taking the helm as the new company’s CEO. In an announcement of the pending deal, Hussain said: “We at Nortel Networks Fraud Solutions are delighted that we have found in Argo such a strategic and seasoned investor, whose knowledge of the sector and carrier relations should help us immensely as we move forward.”

Argo II is one of Telesystem-Argo Global Capital’s two investments funds, which have made more than 35 investments in the wireless sector since 1997. The venture capital firm has offices in Boston, Montreal and Hong Kong, and the wireless operators supporting the two funds include France Telecom, Deutsche Telecom, KPN and Voicestream.