Nortel News: Looking Into BSNL Contract, Joannou Cleans Up, Mike Z.'s Anniversary

BSNL Looking to Award $910M contract

The last time Nortel (NT) aggressively waded into India, it ended up losing more than $260-million on a GSM/GPRS deal to expand Bharat Sanchar Nigam Ltd.’s wireless network - a project pushed by ex-CEO Bill Owens despite the objections of ex-COO Gary Daichendt, who correctly believed it was an uneconomic proposition.

Since then, Nortel has taken a lower-key approach by making small investments (e.g. Sasken Communications) and winning some interesting, but not major, contracts. Call it a pragmatic strategy towards one of the most intriguing, but complex, markets in the world.

There’s speculation, however, that Nortel could take a significant step forward in India if it can win some of BSNL ’s $910 million order for GSM lines. When bidding for the deal was completed earlier this year, Ericsson won 60%, or $1.3-billion worth of business, with a $91 a line bid. Nokia (NOK) bid $171 a line to finish second but missed a deadline to respond to the BSNL order.

If Nokia doesn’t get its act together, this may open the door to Ericsson or Nortel - assuming either supplier is willing to offer attractive pricing.

Source: Reuters

Joannou Cleans Up

It must be nice to be a senior telecom executive who moves on to pursue other interests. Dion Joannou, the who used to head up Nortel Networks’ North American sales, before leaving for “personal reasons” a couple of months ago. From a SEC filing, he will be getting a $780,000 U.S. severance package and other benefits paid over the next 18 months.

Question: How do I get one of those sweet jobs?

Be Patient With Mike Z.

Before you knew it, Mike Z.’s second anniversary as Nortel’s CEO slipped by with little fanfare.

For anyone keeping score, when Zafirovski was appointed Nortel’s president and CEO in mid-October 2005, the company’s shares closed at $4.10. Yesterday, they closed at $1.69 (or $16.92 when you take into account a 10:1 stock consolidation). Zafirovski has talked about Nortel being a three to five year restructuring story so it looks like investors will need to be a little more patient.

Even so, Nortel is a long way away from being an interesting investment story. With, at best, modest, single-digit sales growth and a business that lacks a high-growth product/service, Nortel has little sizzle these days. But maybe being boring isn’t such a bad thing considering all the drama that happened amid the accounting scandal.

For what it’s worth, here’s a table of analysts’ expectations.