Ericsson won the auction for Nortel's wireless business with a $1.13 billion bid, almost twice the amount initially offered by Nokia Siemens Network in June. Officials with RIM, which makes the BlackBerry handheld devices, are holding out hope that they can still get those and other Nortel assets, saying they want to keep Nortel businesses in Canada while expanding their reach in the wireless space.
The dismantling of Nortel Networks is continuing, with Ericsson winning the
auction for the bankrupt company's wireless business for $1.13 billion and
Research in Motion officials saying they are still interested in other Nortel
Ericsson won the bidding for Nortel's CDMA (Code Division Multiple Access)
wireless business and LTE (Long Term Evolution) assets the same week that Avaya
announced a $475
million "stalking horse" bid
for Nortel's enterprise division, which
includes Nortel's UC (unified communications) and government businesses.
The auction for the CDMA and LTE technologies was July 24 in a New
York City law office, and Ericsson was announced as
the winner July 25. Nokia Siemens Network in June announced a $650
million stalking horse bid
, which set the minimum price for the Nortel
Also reportedly included in the bidding was MatlinPatterson Global Advisors,
a Nortel creditor, which had spoken with Nortel officials about buying the
entire company or developing a plan to restructure the company rather than
selling off its assets.
Nortel filed for Chapter 11 bankruptcy protection earlier this year, and
officials-who had pointed to the global recession as a key reason for the
bankruptcy filing, saying it derailed a restructuring initiative in place for
several years-at the time talked about continuing that restructuring strategy.
However, officials have since decided instead to sell off its businesses, with
the sale to Ericsson the first in several steps.
"The anticipated sale of our CDMA business and LTE Access assets to
Ericsson for $1.13 billion represents a very positive prospect for our
customers who will be able to continue their relationships with a long term
partner; for employees who will have new opportunities at Ericsson and for many
of our other stakeholders," Nortel President and CEO
Mike Zafirovski said in a statement. "Nortel remains focused on finding
the right buyers for our other businesses while continuing to maintain
excellent customer service levels. We are determined to maximize value while
preserving innovation platforms, customer relationships and jobs to the
greatest extent possible. With today's agreement and through the anticipated
sales of the Company's other businesses, Nortel will leave its mark on the
industry for decades to come."
The sale, which still needs the approval of U.S.
and Canadian bankruptcy courts and various regulatory agencies, will expand
Ericsson's footprint in North America, according to
President and CEO Carl-Henric Svanberg.
"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," Svanberg said in a statement. "Furthermore, by adding some 2,500
highly skilled employees, of which about 400 are focused on LTE research and
development, Ericsson reinforces and expands a long-term commitment to North
America. This deal, along with our recently announced Sprint
service agreement, truly positions Ericsson as a leading telecoms supplier in North
Ericsson in June announced a $5 billion managed services deal in which it
will take over the day-to-day running of Sprint's wired, CDMA and iDen networks
for the next seven years. Ericsson will take on 6,000 Sprint employees as part
of the deal.
Nortel's North American CDMA operations generated about $2 billion in
revenue in 2008, according to Ericsson. Officials said they expect that
research and development costs in CDMA will be low.
Ericsson's North American business generated $2.7 billion in sales in 2008.
Coupled with the Sprint services agreement, the Nortel deal will make North America
the largest region within Ericsson, with about 14,000 employees.
Meanwhile, RIM officials said they were disappointed to be kept out of the
bidding for Nortel's CDMA and LTE businesses. In a statement July 20, Jim
Balsillie, RIM's co-CEO, said he had hoped
to keep Nortel's assets within Canada-both
Nortel and RIM are Canadian businesses-in deals that also would help RIM expand
its wireless capabilities.
However, according to Balsillie, the BlackBerry maker tried to submit a bid
for the CDMA and LTE businesses, but was told it could do so only if it agreed
not to bid for other Nortel assets for at least a year. RIM officials have said
they are interested in other Nortel assets.
In a statement following the auction, RIM officials said they still hold out
hope of acquiring some Nortel assets, noting that Canadian government officials
have said they will look into the deal with Ericsson.