While JV partner 3Com prepared a deal to take a larger stake in the company, Huawei was putting together another JV with 3Com competitor, Nortel.
The 3Com/Huawei joint venture will now be majority owned by 3Com after the US company acquired an additional two per cent interest in the China-based Huawei-3Com, Ltd.
Subject to final approval by the Chinese Government, 3Com will own 51 per cent of the joint venture and Huawei owning the remaining 49 per cent, an unusual situation as most JVs with Chinese companies remain majority Chinese owned.
3Com agreed to pay Huawei US$28 million for the 2 per cent – an amount that was established as part of the original H-3C formation agreements as a “not-to-exceed” price.
“When the joint venture was formed in 2003, we had three key objectives: First, to establish a substantial presence in China, the world’s fastest growing market; second, to create a resource capable of building enterprise-class, cutting-edge switching and routing products faster than we could deliver on our own; and third, to capitalise on a rapidly growing pool of engineering talent,” said Scott Murray, the new president and CEO of 3Com.
According to IDC the JV commands 31 per cent of the Chinese LAN switch market with a run rate of around US$111 million per quarter.
Meanwhile, far away in Ottowa, Nortel has done a deal with Huawei to establish a new company to be based there. This business will seek to combine Huawei’s broadband access solutions with Nortel’s VoIP products to develop a new product portfolio.
The new range will be targeted at service providers lookingto deliver voice, video, data and wireless services on a common IP platform. The portfolio will support copper, fibre and fixed wireless networks. The joint venture will be majority-owned by Nortel and headquartered in