Interview: Nortel bides time on number two exec appointment

LONDON (Reuters) - Nortel Networks Corp is biding its time on choosing a number two executive but is interviewing candidates to replace its former technology chief, the Canadian-based telecoms equipment supplier said on Tuesday.

Chief executive Bill Owens said Nortel, from which Chief Operating Officer (COO) Gary Daichendt and Chief Technology Officer (CTO) Gary Kunis resigned in June after a management clash, was interviewing internal and external candidates to replace Kunis.

"It (the CTO position) is a very important part of Nortel," Owens told Reuters on a trip to London. "We're making billion dollar bets in many (technological) areas and you just need to be really certain you're going in the right direction."

Owens declined to comment on whether the company had a short list of candidates or when a replacement might be named. And he noted that while Nortel would also function best with a COO, it was the wrong time to speed through the replacement.

"We'll do these things in their own order and when we think that it's the right time to do them," he said. "But for now, we're just fine."

News of Daichendt and Kunis's departure three months ago sent shares in Nortel tumbling, coming as the group emerged from an accounting scandal in which top executives, including former CEO Frank Dunn, were fired.


Banking on India

Nortel says a key growth market is India, where it has won a contract with the country's third-largest mobile phone carrier BSNL -- a business that has generated revenues, but also losses.

India's booming wireless sector has grown at a compound 85 percent per year over the past six years -- but tariffs have fallen about 37 percent per year over the last four years and now rank among the cheapest in the world.

But Owens says entering the market was a "critical strategic decision" that will allow Nortel to utilise its experience and relationships with Indian vendors in other markets.

And he remains sanguine about speculation that Finland's Nokia and China's top telecoms equipment maker Huawei Technologies Co are vying for the second phase of the BSNL contract.

"You have to be in India," he said. "And as a part of being there, we have won other profitable businesses we would not have won if we hadn't been there...It wouldn't be the end of our world (if we lost the next BSNL contract)," he added.


Awaiting consolidation

Owens, who is facing fierce competition from US, European and aggressive Asian rivals in a business portfolio that spans 150 countries, said he expected to see consolidation in the market over the next 10 years.

But he emphasised that rivals had differing equipment and software strengths, noting that Nortel and Germany's Siemens had a strong enterprise business, while Nortel and US peer Lucent Technologies shared a strong CDMA business.

"Who knows how it's going to play," he said. "But what is clear to me is that there are too of many of us in the same marketplace...I would be surprised if we don't have significant consolidation in the next 10 years.

"It will be interesting to watch."

Asked whether he was planning to stand on the sidelines, he laughed: "No -- it will be interesting for you to watch."

Owens declined to comment on whether the company was on track to meet its forecasts for 10 percent year-on-year revenue growth, for gross margins of between 40-44 percent or how his order book was shaping up.

"We feel good about where we're standing," he said.

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