Verizon seeks to block Avaya's Nortel bid

Verizon is the latest telecommunications company to object to Avaya's bid for Nortel's Enterprise Solutions division, as the telco said the sale would compromise key U.S. law enforcement, anti-terrorism and other national interests. According to the Wall Street Journal, Verizon said one of the two potential Nortel buyers would not accept Verizon's support contracts, which it said would put the American public at risk.

A judge in Delaware will hear Verizon's argument today in an emergency hearing, according to the report. The stalking horse auction for Nortel's Enterprise Solutions division is scheduled for tomorrow, but could be postponed by a stay from the judge, if security issues are indeed proven to be at stake in the purchase.

According to the terms of this auction, the winning bidder decides which pre-existing Nortel contracts it wants to continue and which ones it wants to abandon. Verizon is arguing that its services contracts are too important to government, military, and hospital organizations be left to the whims of the winner, leading to the suit.

Of course, Verizon stands to lose revenue if its contracts are not continued, so I wouldn't chalk this one up completely to goodwill and concern on the part of the giant telco. Still, raising the issue of military and national security concerns the day before the anniversary of September 11 will be sure to draw attention. 

For more:
- see the Wall Street Journal article here 

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