Telecom Lead Asia: After reporting year-on-year and sequential decline in optical networking (ON) equipment revenue in Q3 2012, Nokia Siemens decided to sell ON business to Marlin Equity Partners.

Earlier, Ovum said Nokia Siemens Siemens, Tellabs and ZTE posted sequential and year-over-year revenue declines.

Nokia Siemens on Monday said divestment of ON business will further enhance its strategic focus on mobile broadband.

Marlin Equity Partners will establish the optical unit as an independent new company with financial resources committed to building leadership position in optical networking market.

According to Ovum, Ericsson, Fiberhome, Huawei and NEC posted both sequential and year-over-year revenue growth in Q3 in global optical networking equipment market that dipped 1 percent to $3.7 billion.

Ericsson, Fiberhome, Huawei and NEC will be looking at gains from this transaction. Nokia Siemens said its ON customers will be transferred to the new company.

ON segment is going through a tough phase.

Recently, Ron Kline, principal analyst network infrastructure, Ovum, said: “The competitive environment is challenging at the moment. Many vendors are grateful just to see their business stay flat. It will be very difficult for the market to reach the 2 percent growth we have predicted for the year. Now is the time to position next-generation products with operators which will have no choice but to turn spending back on in 2013.”

Vendors with strong exposure to weaker North America and EMEA markets are cutting costs and restructuring operations to ride out the current economic storm. Ovum believes the economic malaise will continue for the rest of 2012 and into 2013 at the very least, and could get potentially worse should the US government let its economy fall off the fiscal cliff.

Ovum is advising its clients that the global market will likely contract into the $14.5–15 billion range. The research agency is not anticipating a large-scale buying spree that would recoup all the ground lost in the three earlier soft quarters.

“During 2012 Nokia Siemens Networks has made tremendous progress in the transformation of our company to being the world’s mobile broadband specialist. Our strategic focus on our core markets has enabled us to concentrate our energy and investment in areas such as LTE where we have strengthened our global leadership position,” said Rajeev Suri, chief executive officer at Nokia Siemens Networks.

 

Marlin Equity Partners, a Los Angeles California-based private investment firm with over USD $1 billion of capital under management, has formed a new company and intends to act as a consolidator, building an industry leader in the fragmented optical networking sector.

“We are making a major commitment to this sector, and have significant capital under management that we intend to use as a catalyst for consolidation,” said Nick Kaiser, a co-founder and partner at Marlin Equity Partners.

The new ON company will be based in Munich, Germany with operations around the world and will be led by its existing management team with Herbert Merz nominated as chief executive officer.

Around 1,900 employees – mainly in Germany, Portugal and China – from the optical business unit and related functions are expected to transfer to the new company.

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