Nortel Networks yesterday filed for bankruptcy protection, citing the global financial crisis and recession as reasons that compounded its financial challenges and directly impacted the company’s ability to complete the transformation programme underway since 2005.

Nortel owes more than US$3.6 billion in bonds, with US$1 billion in debt coming due over the next two years

Last month Comm. reported how Nortel had received notice from the New York Stock Exchange that the vendor’s stock had fallen below the continued listing standards. Nortel’s average closing price on the exchange had been under US$1.00 for 30 consecutive trading days and as such the company needed to either remedy this or face the possibility of being delisted. Shares in Nortel closed January 13 at US$0.32 cents, having fallen 97 per cent over the past 12 months.

Nortel said that it owed more than US$3.6 billion in bonds. Those bondholders are being represented by the Bank of New York Mellon as a trustee. Nortel is also seeking bankruptcy protection in Canada, while certain of the company’s EMEA subsidiaries are expected to make consequential filings in Europe. More than US$1 billion in debt is coming due over the next two years, a situation which was also a factor in Nortel seeking bankruptcy protection at this time.

“Nortel must be put on a sound financial footing once and for all,” said Mike Zafirovski, Nortel’s CEO, in a statement. “These actions are imperative so that Nortel can build on its core strengths and become the highly focused and financially sound leader in the communications industry that its people, technology and customer relationships show it ought to be.”

Nortel said that it has US$2.4 billion in cash on hand to finance its operations.

Telecel Globe, Orascom’s African subsidiary, has acquired 100 per cent of Namibian’s second mobile operator Cell One for US$59 million.

Mobile penetration in Namibia stands at approximately 50 per cent of the 2.1 million inhabitants

Cell One has 198,000 active subscribers since launch in March 2007, equating to more than 20 per cent market share.

Egypt’s Orascom stated that US$32 million had already been paid in cash with the balance due in January 2010. Telecel Globe has acquired all the shares previously held by majority shareholder Norway-based Telecom Management Partner (TMP) as well as fellow shareholders, while the debt assumed as part of this transaction is non-recourse on Telecel Globe.

“Cell One is well positioned in the Namibian market to become the key provider of competitive mobile voice and data services,” commented Kai Uebach, Telecel Globe’s CEO. “This investment will further strengthen the traditionally good relationship and mutual trust between Namibia and Egypt.”

Orascom said Namibia is amongst the wealthiest countries in sub-Saharan Africa with a GDP per capita of US$5,200. The country has a population of approximately 2.1 million and a mobile penetration of close to 50 per cent at the end of 2008.

Cell One’s only mobile competitor is the Mobile Telecommunications Company which is partially owned by Portugal Telecom.

Telecel Globe’s acquisition is part of the company’s strategy to target licences and mobile operators in small and medium-sized developing countries that have high growth potential, and follows recent acquisitions of U-Com in Burundi and an operation in the Central African Republic.

Telecel Globe’s subsidiaries combined with Orascom’s operations in Algeria, Pakistan, Egypt, Tunisia, Bangladesh, Zimbabwe and North Korea, brought the group’s total subscribers to 79 million as of September 30, 2008.

Lebanon’s Ministry of Telecommunications has extended Zain’s management contract of mobile operator MTC Touch by another year, and awarded Egypt’s Orascom a similar contract to manage Alfa’s network.

Orascom’s Naguib Sawiris believes the one-year management contract of Alfa paves the way for future opportunities and investment in Lebanon

The new contracts are worth US$145 million, and will come into effect from February 1 for one year, according to local reports.

Orascom will take over administration of Alfa from the ministry, following the termination of the ministry’s previous contract with Fal Dete Telecommunication. Under the terms of the contract, Orascom is required to increase the number of its subscribers from 600,000 at the end of 2008 to one million by the end of this year.

“We believe that our entry to the Lebanese market through this management contract could pave the way for further investments in telecommunications by Orascom Telecom in Lebanon at a later stage,” said Naguib Sawiris, Orascom Telecom’s chairman and CEO.

Zain is also committed to increasing MTC Touch’s subscriber numbers by an additional 400,000 from a current base of 800,000.

In June 2004, Zain commenced a four-year agreement with the Lebanese government to manage the mobile network of Mobile Interim Company 2 (MIC2), which was later rebranded to MTC Touch in 2004.

“We look forward to the privatisation of the mobile sector and are hopeful that we can secure a long term licence to operate in this promising country,” commented Zain’s CEO Saad Al Barrak.

Lebanon has some of the highest mobile charges in the Middle East, with only 1.4 million of its four million inhabitants, or 35 per cent, connected to a mobile network.

The new contracts are a bridging measure until privatisation of the cellcos takes place, following repeated delays due to the global financial situation.

UAE’s Etisalat confirmed today its consortium with Iran’s Tamin Telecom was the successful bidder for Iran’s third mobile licence, at a price of US$402.1 million.

Etisalat will compete in Iran with state-backed TCI and MTN Irancell, and will spend US$1 billion in building its mobile network 

The consortium plans to launch operations by the third quarter of this year and possibly earlier, the operator’s chief executive of international investments Jamil Al-Jarwan, told UAE press.

Etisalat is targeting one million subscribers in Iran within the first year of operations and has vowed to invest US$1 billion in its network rollout.

The UAE operator owns 49 per cent of the consortium that outbid consortia led by Oman’s Omantel and Malaysia’s TM International.

Etisalat will compete with the state-backed Telecommunications Company of Iran (TCI), which operates both a fixed-line and mobile network and MTN Irancell. Mobile penetration is 60 per cent of the country’s 70 million inhabitants, with TCI holding a 70 per cent market share.

The Persian operation would be Etisalat’s 19^th operation across the Middle East, Africa and Asia, with Iraq considered to be the next market the operator is interested in.

Etisalat ‘s chief financial officer Salem Ali al-Sharhan stated the company was in advanced negotiations to acquire an existing Iraqi operator, with Korek Telecom the most likely target.

The two national networks in Iraq are operated by Bahrain-based Zain and Asiacell, in which  Qatar’s Qtel has a stake.

Bahrain’s Telecommunications Regulatory Authority (TRA) has confirmed that Saudi Arabia’s STC is the only contender for the country’s third mobile licence.

STC’s financial bid will not be opened until January 22, despite being the only bidder for Bahrain’s third mobile licence

The regulator had previously announced that there were four registered bidders, although only the one submitted a bid when the auction closed yesterday.

Despite being the only company in the running, the TRA is waiting for  the technical aspects of STC’s bid to be approved before its financial bid will be opened on January 22.

The TRA stated that the Saudi operator had passed pre-qualification requirements with group revenues in excess of US$9 billion per annum, operations in Saudi Arabia and six other countries, more than 60 million subscribers and deployments of the latest technology.

The two mobile incumbents are Batelco and Zain Bahrain, with the country having a mobile penetration rate of 138 per cent as of September 2008.

STC has been a late entrant to overseas expansion, but acquiring a mobile licence in Bahrain would be its fourth significant strategic investment since June 2007.

It spent almost US$6.5 billion in its combined purchases of a 25 per cent stake in Malaysia’s Maxis, a 26 per cent stake in Kuwait’s third mobile firm Viva, and 35 per cent of Oger Telecom, which gives the operator access to Turkey and South Africa.