Ottawa, Canada — Susan Taylor reported: Mitel Corp. (MLT.TO) (MLT.N) said on Monday it had set up a new company to produce chips designed to boost the capacity and slash the cost of fiber-optic networks.
Mitel, which last month struck a deal to sell its office phone system and company name for $233 million to company co-founder Terry Matthews, did not disclose the amount it has spent on the new company, named Optenia. Ottawa-based Mitel, which is Optenia’s majority owner, said it is in the midst of closing financing deals with several venture capitalists in Canada and the U.S. that will reduce its ownership stake.
Typically, such start-ups in the attractive fiber-optic sector receive between $50 million and $100 million in funding, said an analyst who asked not to be named.
Seeds for Optenia were planted four years ago, under a joint fiber-optic research project between Mitel and the National Research Council of Canada.
To capitalize on a technical breakthrough that came this summer, Mitel decided to start a company that could push product development to meet its July target for sample chip delivery.
In August, Mitel produced working prototypes of a chip that is designed to create more channels, or traffic lanes, on a single fiber-optic strand, to carry voice, data and video traffic on optical networks. The device can cram as many as 80 channels or wavelengths onto a strand of glass using standard semiconductor materials, cutting costs by three to five times, Mitel said.
“We view this to be the next wave…in terms of making the Internet available to the world’s 6.5 billion people,” said Moris Simson, who leaves his job as Mitel’s senior vice president to become Optenia chief executive. Mitel chief executive Kirk Mandy will also sit on Optenia’s board of directors.
Optenia has 25 staff from Mitel and the National Research Council, but expects to employ 100 a year from now. The new company will target optical system suppliers such as Nortel Networks Corp. (NT.N) (NT.TO), Lucent Technologies Inc. (LU.N) and CIENA Corp. (CIEN.O) as customers.
Optenia is joining an increasingly crowded field of firms supplying similar optical components and will face stiff competition, said Chris Bonnet, analyst at Groome Capital.
“They’re a bit late in the game,” said Bonnet. “But does it matter? Because this is a hot space — there’s a lot of potential in this market. Although I’m a little concerned…about the competitive landscape next year when these products come out.”
Optenia will square off against such companies as privately held MetroPhotonics Inc. of Ottawa, which has similar technology.
As Optenia develops new technology for channel monitoring and switching, it will run up against such firms as Britain’s Bookham Technology Plc (BKHM.O) and Montreal-based Lumenon Innovative Lightwave Technology Inc. (LUMM.O)
Shares in Mitel gained more than 5.5 percent to end at C$15.20 on the Toronto Stock Exchange on Monday. U.S. markets were closed on Monday. ($1-$1.50 Canadian)