Ericsson to pay $1.13 billion for Nortel wireless tech

Ericsson cast the $1.13 billion winning bid in an auction for the wireless assets of bankrupt Nortel Networks, the companies said Saturday.

The Swedish telecommunications giant picked up Nortel's CDMA and next-generation LTE wireless technologies. As part of the agreement, at least 2,500 Nortel workers supporting CDMA and LTE will be offered jobs at Ericsson.

CDMA, or code division multiple access, is one of two major networks operating in the U.S. and is used by Verizon Wireless and Sprint Nextel. LTE, or Long Term Evolution, is 4G wireless technology that will potentially replace today's mobile networks.

"This deal, along with our recently announced Sprint service agreement, truly positions Ericsson as a leading telecoms supplier in North America," Ericsson CEO Carl-Henric Svanberg said in a statement.

The purchase includes the CDMA contracts with Verizon and Sprint, as well as with U.S. Cellular, Bell Canada, and Leap, Ericsson said.

Ericsson was one of three bidders in Friday's auction. Nokia Siemens Networks and private equity firm MatlinPatterson were its competitors.

In mid-June, Nokia Siemens offered $650 million for Nortel's assets. That offer set others into motion and led to the auction.

"Our final offer for Nortel's assets represented a fair price, and we did not enter this process with a win-at-any-cost mindset," Bosco Novak, Nokia Siemens' chief markets operations officer, said in a statement.

Ericsson's bid is still subject to bankruptcy court approval in the U.S. and Canada.

The purchase virtually ensures that Nortel will sell off the rest of its businesses, instead of reorganizing into a smaller company.

"Nortel remains focused on finding the right buyers for our other businesses," Nortel CEO Mike Zafirovski said in a statement.

Once a giant in wireless gear, Toronto-based Nortel filed for bankruptcy earlier this year.

Nortel was founded in 1895 as Northern Electric and Manufacturing and supplied telecommunications gear for Canada's young telephone system. At the height of its glory days about 10 years ago, Nortel was worth $250 billion and had more than 90,000 employees.

[twburger]

After the enormous cost to the Canadian taxpayer caused by mismanagement and just plain criminal behavior Nortel should have been seized by the federal government and the wireless assets of Nortel Networks sold to Canadians to create Canadian jobs. This looks like another taxpayer funded bargain for foreign owners. The Conservatives could not have provided a worse example of their apparent attitude toward the country if they had approved the purchase of a fleet of new Volvos for the government car pools.

[gdmaclew]

Taxpayer funded?
Where do you get that idea?

[Mr. Dee]

90,000 employees, 250 billion dollars? What happened?

[1st]

40% of national R&D tax credit went into it. Plus free use of Her Majesty of Queen's patents (the patent generated using National Research Council of Canada, that belong to the country), including the key patents such as fiber optical grating making methodology that are key to produce fiber laser, DWDM, Raman Amplify, EDFA amplify, etc. Basically, Canadian citizen funded a lot of technology went to Ericsson due to bad management. One flaw in technology impact a small sector, but one bad business Mgr has far more damaging impact to a industry. Taxpayer funded indeed.

[spoonie1972]

I'm no lover of RIM technologies, but I'm very surprised the Canadian Government didn't want to keep technology at home.