Ericsson wins bidding war for Nortel carrier networks assets

Ericsson on Saturday emerged as the surprise victor in a competitionfor the carrier networks division of failed telecommunications giantNortel Networks, paying US$113 billion and edging out Nokia-Siemens anda 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 itsLTE and CDMA units, which was expected to draw other bidders. BesidesNokia 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 intoFriday night, the Globe and Mail reported that the BlackBerry maker wasexpected 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 ofwhich will be focused on LTE research and development, the companysaid. Ericsson customers include Sprint, with which it recently signeda US$5 billion contract in the United States.

Ericsson president Carl-Henric Svanberg said in a statement theagreement includes important CDMA contracts with North Americanoperators such as Verizon, Sprint, U.S. Cellular, Bell Canada and Leap,as well as LTE assets, certain patents and patent licenses relating toCDMA and LTE. Nortel’s customers will also benefit from the continuedsupport of Nortel’s installed CDMA base and the migration path to LTE.

“Acquiring Nortel’s North American CDMA business allows us to servethis important region better as we build relationships for the futuremigration to LTE,” he said.

Ericsson will host a press conference Monday morning to outline moredetails of its plans for Nortel’s assets following the acquisition.

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Shane Schick
Shane Schick
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