Mumbai: Alcatel is scaling up operations with a planned acquisition of Nortel's third-generation cell phone network unit for $320 million.

Alcatel has signed a memorandum of understanding (MoU) with Nortel to buy its UMTS radio access business (UTRAN) and related assets. This includes UMTS base stations, radio network controllers, operation and administration maintenance software and associated services.

The deal will catapult the French communications network provider to number three position in 3G networks and help the company push into emerging markets.

Alcatel currently has an estimated 3G market share of three to four per cent and the acquisition would bolster this to around 12-14 per cent, only behind leader Ericsson and Nokia/Siemens.

The acquisition will also give Alcatel 14 new customers, including Vodafone in Spain, Italy, Portugal and Britain as well as Orange in France, Slovakia, Poland and Belgium.

The deal, which is subject to regulatory clearances and closing conditions, is expected to be completed in the fourth quarter.

Alcatel provides communications solutions to telecommunication carriers, internet service providers and enterprises for delivery of voice, data and video applications. With sales of Euro13.1 billion and 58,000 employees employed in more than 130 countries in 2005, Alcatel is a leader in fixed and mobile broadband networks, applications and services.

Nortel, a leader in delivering communications capabilities that power global commerce and secure and protect the world's most critical information, serves Fortune 500 companies and government institutions around the world providing reliable and secure solutions. Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband.

Alcatel, meanwhile, is looking ways of combining its mobile operations with those of Lucent. The Paris-based group is trying to muster investor support for its acquisition of US rival Lucent.