Analysts: Avaya/Nortel integration could be messy

By Lilia Guan on Sep 16, 2009 3:40 PM
Filed under Services

Complementary deal could turn sour.

Avaya's US$900 million spend on Nortel's enterprise business will bring in key contracts with the Australian Government and a vast number of local channel partners, but analysts also warn the integration of the two companies could be "messy".

If the sale is pushed through without any issues and integration of both companies goes smoothly, the voice vendor could become a "strong number two player in IP telephony for enterprises", said Claudio Castelli, senior analyst Enterprise - Asia Pacific at analyst firm, Ovum.

He told CRN Avaya would also increase its market share in Australia, inherit Nortel's large reseller network and leverage new up-sell opportunities among the network vendor's customer base.

Rod Taylor, CEO of 3D Networks (a Nortel enterprise business integrator) told CRN customers of both companies took satisfaction from the fact the 'merged entities' represented a complimentary alliance of technologies.

"We have been in negotiation with Avaya both in Australia and through Asia to align our two businesses to that of our customers," he said. "3D expects to formally announce the outcome of those discussions in the next few weeks, suffice to we're well placed to position our customers to benefit from the acquisition".

Taylor claimed the integrator's existing alignment to Nortel, Cisco, Microsoft, Juniper and Mitel would be strongly complimented by the acquisition of Nortel by Avaya.

"We see this as a further extension of our expertise and we will continue to invest in our team's expertise to deliver consultative best of breed solutions to our customers," he said.

However Castelli said the integration process had the potential to be distracting and messy.

"The integration of a product portfolio might be the easy part but people and organisations are generally complex," he said.

Castelli warned the combined company would initially face a confused product portfolio with a good deal of overlap and a channel that has been bruised during Nortel's filling time.

Rick Seeto, VP Enterprise Solutions at Nortel told CRN it continued to with its channel partners to both secure and close business.

"Until the sale transaction closes - Nortel and Avaya - are separate competing companies," he said. "We will be working on transition plans to implement once the transaction is fully approved."

Seeto claimed Nortel's Enterprise business in Australia had a focused presence in Canberra with a number of key contracts in place with the Federal Government Agencies.

"We cannot disclose details of these contracts as they are signed under non-disclosure agreements," he said. "We have seen significant Government infrastructure spending across the Asia Pacific Region, and continue to work closely in support of multiple Australian Government customers."

Seeto said throughout the sale process both parties will ensure that all relevant laws are complied with.

"We are not aware of any specific local regulatory issues which would impact our ability to close the transaction," he said.

 
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