In a dramatic retrenchment, Northern Telecom Ltd is handing over its North American unit that markets and services PABX and other telephone equipment in the corporate market to Williams Communications Group Inc in return for a 30% stake in the combined company. The merged entity will comprise the Canadian’s TTS Meridian Systems Inc and Nortel Communications Systems Inc distribution units and Williams’ distribution unit, will be based in Houston, and will be called WilTel Communications LLC. Williams Communications, part of Tulsa, Oklahoma gas pipeline operator Williams Cos Inc, will pay Northern Telecom an undisclosed sum in cash, which analysts estimated at some $200m. The three units have 6,000 employees and annual sales topping $1bn. The deal has not gone down too well with observers, who accuse the Canadian of lack of consistency since the company acquired the businesses being acquired only two years ago. WilTel has a poor reputation with corporate customers although this may no longer be justified, which means that Northern Telecom users may look askance at becoming customers of the Houston company, and many distributors of Northern Telecom products in the corporate market compete with WilTel and may now decide to back off the products.
