NEW YORK - U.S. network equipment maker Tellabs Inc said on Thursday that it planned to buy wireless infrastructure gear manufacturer WiChorus for $165 million to bolster its next-generation mobile Internet technology.
Privately owned WiChorus specializes in 3G and 4G infrastructure products, which support advanced mobile services.
It is a much smaller competitor to Starent, which recently announced it would be bought by industry leader Cisco Systems Inc for $2.9 billion.
Tellabs said the acquisition was set to dent its profit in 2010, but add to earnings excluding special items from 2011.
Analysts have said they expect more mergers and acquisitions in wireless networking as phone companies upgrade their networks to accommodate more wireless Internet access, including advanced applications like mobile TV.
Wireless data is now growing at the rate of 30-50 percent per year, and AT&T recently indicated its mobile traffic has quadrupled over the past year, UBS analyst Nikos Theodosopoulos said in a research report.
The mobile core market, where WiChorus is positioned, may possibly reach up to $2.6 billion by 2013, he added, reiterating his neutral rating and $7.50 price target on Tellabs shares.
The stock was down 2.8 percent at $6.60 at midday, while the Nasdaq composite was down around 0.5 percent.
WiChorus' investors include Accel Partners, Mayfield Fund, Redpoint Ventures and Pinnacle Ventures. (Reporting by Ritsuko Ando; Editing by Lisa Von Ahn)