14 DAY TRIAL // Swedish telecommunication equipment company Ericsson announced on Saturday that it had placed a bid of $1.13 billion in an auction for Nortel Networks' CDMA and next-generation LTE wireless technologies divisions, and that it won. According to the company, the agreement between bankrupt Nortel and Ericsson states that at least 2,500 Nortel workers from the units will be transferred to Ericsson.
As many of you might already know, CDMA (code division multiple access), is one of the two major networks that wireless carriers in North America use. At the same time, LTE (Long Term Evolution) is a next-generation 4G technology that will be used for the deployment of more advanced networks that will most probably replace the currently existing wireless ones.
“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. According to Ericsson, the purchase of Nortel's divisions also includes CDMA contracts the company has with carriers like Verizon and Sprint in the US, or U.S. Cellular, Bell Canada, and Leap.
There were three companies bidding for Nortel: Ericsson, Nokia Siemens Networks and MatlinPatterson, a private equity firm. Previously, Nokia Siemens placed a $650 million bid for Nortel's assets, an offer that made others enter the competition. Although Ericsson made a higher offer, it is still subject to bankruptcy court approval in the U.S. and Canada.
Bosco Novak, chief markets operations officer, Nokia Siemens Networks, commented: “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. Ours was an opportunistic bid aimed at supporting the great progress we've made in North America in the past 18 months, and we are very confident that momentum will continue to grow.”
Toronto-based Nortel filed for bankruptcy at the beginning of the year, although it used to be one of the wireless giants in the world. The purchase of its CDMA and LTE businesses shows that the company will probably sell the rest of its assets as well, and that there are little chances that it will try a reorganization into a smaller company.