AT&T Network Systems Inc. said it intends to buy some of Philips Electronics’ assets in a deal that would grant AT&T access to Global System for Mobile communications-based cellular equipment, and therefore provide the company a gateway to European and other markets.

Specifically, the two companies have signed a memorandum of understanding for AT&T to acquire a portion of public network assets held by four units within Philips’ Communications System division-Cellular Infrastructure Systems, Managed Transport Networks, Transmission and Microwave Transmission and Access. Financial details have not been disclosed.

The businesses under consideration include activities of subsidiaries Philips Kommunikations Industrie of Nuremberg, Germany, and Telecommunications Radioelectriques et Telephoniques of Paris. Philips’ European operations resources include manufacturing sites in both Germany and France and more than 3,000 employees.

Without the Philips deal, AT&T risks being precluded from a fast-growing cellular market in Germany. AT&T also needs Philips, or another third party, to provide infrastructure that will supplement AT&T’s GSM projects in Saudi Arabia, the United Arab Emirates and Malaysia, contracts collectively worth about $1 billion, AT&T said.

The overall mission of the acquisition is “gaining increased access to European markets,” remarked Barbara Burgess, a spokeswoman for AT&T Network Systems, noting the purchase sends a clear signal of AT&T’s commitment to provide telecommunications service to customers worldwide.

The Philips deal would make AT&T “the only supplier that can offer customers worldwide with virtually any type of wireless system they require,” said AT&T. Once the transaction is completed, AT&T said its technology portfolio would include Digital European Cordless Telecommunications and GSM standards, as well as Advanced Mobile Phone Service, Code Division Multiple Access, DCS 1800, Time Division Multiple Access and Personal Handyphone System technologies.

For Netherlands-based Philips, the sale of certain operations and assets is “in line with our strategy of concentrating our efforts on personal communications,” commented Pieter van der Wal, chief executive officer of Philips Communications Systems, “including such products as cellular, corded and cordless telephones, faxes and pagers, business communications systems, data communications, private mobile radio, and smart cards and systems.”

AT&T reported Philips’ public network communications systems products and businesses include GSM base station equipment, rural telephony solutions, point-to-point microwave transmission equipment and wireless local network access using the high speed transmission systems based on synchronous digital hierarchy technology. Philips SDH systems will be an “ideal fit” with AT&T’s SDH product line, said AT&T. The company lauded Philips’ expertise in fixed wireless and rural access technologies.

Approval by both companies’ boards of directors is required to complete the acquisition and is expected to be reached by the end of the year, said Burgess.


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