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Zyxel Communications

Posted by tggokul on January 19, 2007

The Economic Daily News reports that both Cisco and Alcatel have made separate bids for Taiwan’s network device maker Zyxel Communications.

Alcatel has offered to buy just one division for $ 4.5 billion (Taiwanese dollar)and they are interested in Zyxel’s flagship IP-DSLAM product. Revenues for this division accounts for nearly 10% of Zyxel’s overall revenues. Alcatel has been the world leader in IP-DSLAM from the time they deployed the 7302 Intelligent Service Access Manager 3 years ago. This incidentally was the first solution which enabled triple play across a broadband access platform. Needless to say Alcatel has been way ahead of other infrastructure companies when it comes to IP-DSLAM.

Now these are my theories as to why this offer might have been made by Alcatel. Alcatel’s first deployment of the above mentioned solution was installed in China Telecom and I have heard ( strictly a rumour and I haven’t been able to confirm that) that China Telecom has some stake in Zyxel Communication. They have IP-DSLAM solution from Zyxel as well and it is probable that China telecom initiated this process. Also China Telecom has always been uneasy with Cisco (they prefer Huawei) and they wouldn’t be too happy, for obvious reasons, if Cisco got hold of Zyxel.

As far as I know Cisco does not have a IP DSLAM and this might be their strategy to move more aggresively into the “access” area.  Talking about companies weak in this area, Ericsson is lagging way behind Alcatel in this. It wouldn’t hurt Ericsson to bid for Zyxel as well.

Anyway looks like the acquisition game has heated up in this region.  I had predicted in my earlier blogs (about Reliance) that the next set of major acquisition will be from this region. Let’s see whether I get it right.


2 Responses to “Zyxel Communications”

  1. JJ said

    My 5 cents to probably bring some light on what’s going on:

    For last 4 years, ZyXEL was a primary ODM IP-DSLAM supplier for Alcatel, mostly for mainland China market. Their 7324 remote DSLAMs are re-branded ZyXEL IES-2000 and 5000s. I doubt there is any CT’s stake in ZyXEL, it rather seems that it is Alcatel’s own intention.

  2. LionK said

    JJ knows what he is talking about!

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