Ericsson on Saturday emerged as the surprise victor in a competition
for the carrier networks division of failed telecommunications giant
Nortel Networks, paying US$113 billion and edging out Nokia-Siemens and
a potential play from Canada’s Research In Motion.
Based in Sweden but with a research centre in Montreal that develops Long-Term Evolution (LTE) products, Ericsson was the third company to join in the auction for the assets from Nortel, which has been operating under bankruptcy protection since January and has been looking for buyers for its business units.
Last month, Nortel formed what was called a “stalking horse”
agreement with Nokia Siemens Networks for US$650 million to sell its
LTE and CDMA units, which was expected to draw other bidders. Besides
Nokia Siemens and Ericsson, contenders included private equity firm MatlinPatterson, to whom Nortel owes more than $400 million.
Although RIM had not formally bid in the auction, which went late into
Friday night, the Globe and Mail reported that the BlackBerry maker was
expected to support MatlinPatterson’s efforts after allegations to the government it had been blocked from purchasing its wireless products and services.
The deal will bring Ericsson more than 2,500 employees, about 400 of
which will be focused on LTE research and development, the company
said. Ericsson customers include Sprint, with which it recently signed
a US$5 billion contract in the United States.
Ericsson president Carl-Henric Svanberg said in a statement the
agreement includes important CDMA contracts with North American
operators such as Verizon, Sprint, U.S. Cellular, Bell Canada and Leap,
as well as LTE assets, certain patents and patent licenses relating to
CDMA and LTE. Nortel’s customers will also benefit from the continued
support of Nortel’s installed CDMA base and the migration path to LTE.
“Acquiring Nortel’s North American CDMA business allows us to serve
this important region better as we build relationships for the future
migration to LTE,” he said.
Ericsson will host a press conference Monday morning to outline more
details of its plans for Nortel’s assets following the acquisition.
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