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News Item

Tellabs Acquires WiChorus

Extends mobile solution with innovative 3G/4G mobile packet core to help customers succeed

Users want mobile Internet services anywhere, anytime. Sales of smartphones are growing more than 30% a year, and netbooks are taking root. As a result, Tellabs' mobile customers expect mobile data traffic to grow 30% to 50% a year for the foreseeable future. Such high growth demands scalable, next-generation network architectures to deliver 3G and 4G services.

That's why Tellabs, a leader in mobile backhaul networks, will acquire WiChorus of San Jose, Calif. The combination creates advanced 3G/4G mobile networks that revolutionize the mobile Internet, deliver new applications to generate revenue and simplify networks to achieve significant savings for mobile carriers.

"As we expand logically into an adjacent market with the SmartCore(TM) platform, Tellabs and WiChorus can help mobile customers succeed by revolutionizing the mobile Internet," said Robert W. Pullen, chief executive officer (CEO) and president of Tellabs. "Our customers are excited about this combination, since they can deliver rich, distinctive personalized user experiences such as mobile Internet, video and commerce. This move complements, differentiates and advances our growth solutions portfolio including Tellabs Mobile, Optical and Business Solutions."

The acquisition adds WiChorus' breakthrough SmartCore(TM) mobile packet core platform, the only currently available platform that is purpose-built for 4G, LTE and WiMax, with support for 3G. The SmartCore(TM) platform addresses the unique requirements of the mobile Internet as it:

  • Includes a full range of mobile IP products (from low entry price to highly scalable) for applications including GGSN, LTE and WiMax, plus new application enablement with superior DPI capability.
  • Offers 8 times more throughput, 4 times more simultaneous Internet connections and active users, compared with competitive platforms in gateway applications.
  • Uniquely combines world-class application analytics with a mobile core gateway for improved traffic engineering and network optimization.
  • Enables customers to analyze and monetize more than 400 of the top mobile Internet applications.
  • Makes mobile networks content-aware and context-aware, with personalized application-awareness.
  • Outperforms other platforms in delivering mobile Internet capacity. For example, competitors' capacity significantly degrades (as much as 30% to 50%) during deep-packet inspection (DPI).
  • Delivers new and differentiated applications such as Internet offload and distributed LTE gateway. The SmartCore(TM) platform can offload as much as 70% of traffic at the network edge, increasing core network efficiency and improving user experiences. As a result, customers can save as much as 50% in capital expenses, compared with the present method of operation.

Under the terms of the transaction, which was approved by both companies' boards of directors, Tellabs will pay approximately $165 million in net cash for WiChorus. The transaction is expected to be dilutive to Tellabs' earnings in 2010, then additive to Tellabs' non-GAAP earnings in 2011 and beyond. Non-GAAP earnings exclude amortization associated with acquired intangibles and other purchase accounting adjustments.

"WiChorus SmartCore is the leading packet core solution in the industry, providing the highest performance and built-in optimization and monetization capabilities," said Rehan Jalil, president and CEO of WiChorus. "The combination of the world's most advanced packet core with Tellabs' IP mobile backhaul solution and intelligent network manager creates a winning combination and a comprehensive mobile Internet portfolio. The combination will enable service providers to enhance mobile users' experience, deliver new revenue-generating applications and achieve savings."

On completion of the transaction, Rehan Jalil will head a newly formed Tellabs IP and mobile Internet group, as senior vice president, reporting to Pullen. The transaction is subject to customary closing conditions and regulatory reviews. It is expected to close within the next several months.

Prior to close, Tellabs and WiChorus will continue to operate as separate companies. The combined company will employ about 3,250 people.

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