The opposition Liberal party’s industry critic, Marc Garneau, is disappointed the federal government decided not to review the US$1.13 billion sale of Nortel’s carrier wireless assets to Ericsson.
“I am convinced that any other country in a similar situation would have submitted this sale to a review,” Garneau, Liberal Member of Parliament for the Montreal riding of Westmount Ville-Marie, said in an interview.
He did not propose the government actually block the sale.
On Wednesday Industry Minister Tony Clement announced the government would not review Ericsson’s purchase of Nortel’s carrier wireless assets because the book value of what is being bought is less than $312 million. “They are hiding behind the flimsy excuse the they hired a company to evaluate its book value.”
In August, the Liberal party called on the government to review the sale after Research in Motion Inc. claimed if LTE networks are made a foreign company it could harm national security. At the time, a press release from Garneau’s office demanded the feds “provide proof of the benefit of the sale of Nortel's wireless assets to Canadians before allowing it to proceed. “
In July RIM had claimed it was unfairly shut out of the bidding process, but Nortel officials have said RIM was ineligible to bid because it refused to sign a non-disclosure agreement.
RIM tried unsuccessfully to buy Nortel’s Long Term Evolution patents earlier this year. Nortel plans to keep those patents and Ericsson’s wireless acquisition gives it a non-exclusive license to them.
The sale, which was approved by bankruptcy courts in Canada and the U.S., is part of an effort by Nortel to sell most of its assets in order to pay creditors. The Toronto-based network equipment manufacturer has been operating under bankruptcy protection since January.
During a hearing Aug. 7 before the House of Commons Standing Committee on Industry, Science and Technology, Nortel chief strategy office George Riedel said the book value of the assets Ericsson is buying is US$149 million, which is comprised of US$111 million in current assets and US$38 million in fixed assets.
Some Members of Parliament expressed dismay that a US$1.13 billion acquisition could have such a low book value. For example, Mario Laframboise of the Bloc Quebecois said the “real value is more important than the book value.”