Verizon Communications says it is ready to oppose the sale of the enterprise business unit of Canadian telecom-equipment maker Nortel Networks' to Avaya Inc for $475 million, citing public safety and security concerns.
Verizon, a U.S. telecom company, buys and resells a range of Nortel networking technology. As well as numerous private companies, the customer base for these products includes U.S. government arms as diverse as the military, anti-terrorism agencies, the Congress and the court system.
In a court filing made earlier this week, Verizon said that if Avaya, a U.S. telecom-equipment maker, buys Nortel's enterprise business and Verizon's existing contracts are not taken up and serviced by Avaya, Verizon plans to oppose the sale.
That's because without ongoing maintenance, service and support, Verizon clients that use Nortel's technology could have their communications capabilities disrupted. That poses a significant hazard to the public's welfare, security and safety, Verizon said in a U.S. bankruptcy court filing.
Avaya's bid for the Nortel unit is a stalking horse offer, which means it sets the floor for any other bids that might come in. Last week, Nortel confirmed additional bids have come forward ahead of the auction, which is scheduled for Friday.
Verizon acknowledges in its filing that it's possible a deal between Verizon and Avaya will be reached. As well, it says it's possible that Avaya will not be the ultimate buyer of the assets.
In a statement on Thursday, Avaya said it is talks with Verizon to reach a resolution.
Nortel, once North America's biggest maker of telephone gear, filed for bankruptcy protection in January, blaming the economic crisis on derailing its turnaround efforts.
Not much later, it decided it could generate more value for its creditors by selling itself off in pieces rather than trying to restructure itself into a viable business.
(Reporting by Wojtek Dabrowski; editing by Peter Galloway)