Telecom major Cisco has acquired Starent Networks (News - Alert), a supplier of IP-based mobile infrastructure systems for mobile and converged carriers.

Under the terms of the agreement, Cisco will pay $35 per share in cash in exchange for each share of Starent and assume outstanding equity awards for an aggregate purchase price of approximately $2.9 billion.

“Cisco (News - Alert) and Starent share the same vision to launch, deliver and monetize the next generation multi-media services,” Ned Hooper, senior vice president and chief strategy officer at Cisco, said during a call with investors today, adding that the acquisition underscores the importance of Cisco’s relationship with its service providers. 

The acquisition has been approved by the boards of directors of both companies.

According to the Cisco Visual Networking Index, the mobile Internet is at an inflection point as IP-enabled smartphones and other connected mobile devices gain rapid acceptance. Service providers have been actively investing in this market as global mobile data traffic is expected to more than double every year through 2013.

“Cisco views mobile infrastructure as a key and growing asset, as service providers expand their 3G networks, and as they look to lay the foundation for 4G networks,”  Hooper said.

Hooper also said that given Starent’s global reach and its new involvement with Cisco, the companies will integrate well to operate as one company in a collaborate model. 

Pankaj Patel (News - Alert), senior vice president and general manager of the Service Provider Business at Cisco said that both the two companies will bring complementary technologies to the merger, to focus on the network as a platform for service providers to launch, deliver and monetize the next generation of mobile multimedia applications and services. 

“Combining Cisco's strength in Video and IP with Starent Networks' leading mobile infrastructure solutions, creates a compelling portfolio of products that provides an integrated architecture to offer rich, quality multimedia experiences to mobile subscribers on 3G and 4G networks,” said Ashraf Dahod (News - Alert), Starent Networks president and CEO.

Prior to the close, Cisco and Starent Networks will continue to operate as separate companies. The acquisition is expected to close during the first half of calendar year 2010 subject to customary closing conditions and regulatory reviews.

 
This news follows the company’s recent introduction into the smart grid infrastructure, when Cisco joined the likes of telecom industry figure IBM (News - Alert) to expand its smart movements with the company’s smart grid ecosystem.