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Nortel, Huawei Kill JV

CHICAGO -- Globalcomm 2006 -- Nortel and Huawei have abruptly ended their joint venture to develop broadband products, Nortel has confirmed. (See Nortel, Huawei Form JV)

The agreement, announced in February, had the companies forming a joint venture company to develop "ultra broadband access solutions" for the global service provider market. (See Nortel & Huawei: Broadband Buddies.)

The end of the partnership was disclosed in a 10-Q statement filed by Nortel with the Securities and Exchange Commission (SEC) on Tuesday.

"On November 9, 2005, we and Huawei Technologies Co., Ltd. entered into a non-binding Memorandum of Understanding to establish a joint venture for developing ultra broadband access solutions. We and Huawei have now decided not to proceed with a joint venture," reads the filing. (See Huawei, Nortel Test Interop and Nortel, Huawei Bid on GPON.)

George Riedel, Nortel's Chief Strategy Officer, tells Light Reading that the companies are still talking, trying to find a way to work together without a formal agreeement.

"The expectation going forward is that we will be exploring ways to work together but not in a formal JV," says Riedel.

But for most purposes, it appears that the deal is dead. The 10-Q does say that any new relationship would require a re-negotiation of terms.

"An alliance or relationship, if any, would still be subject to negotiation, execution of definitive agreements and customary regulatory approvals," says Nortel's statement.

The joint venture was to be based in Ottawa and majority-owned by Nortel. It wasn't expected to go into operation until the third quarter of 2006.

Ray Le Maistre, International News Editor, and R. Scott Raynovich, Editor in Chief, Light Reading

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