Ericsson wins Nortel wireless assets for $1.1B

Infrastructure giant Ericsson won the North American wireless assets of Nortel Networks through a bankruptcy auction for $1.13 billion. The move gives Ericsson control over Nortel's North American CDMA and LTE businesses--which generated roughly $2 billion in revenues last year--as well as access to Nortel's customers and intellectual property, and will help it cement its position in the North American CDMA market.

"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. 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," Ericsson CEO Carl-Henric Svanberg said in a release.

Ericsson expects the deal to close sometime in the third quarter.

The news caps several weeks of increasingly intense interest around Nortel's wireless assets. Nokia Siemens Networks, private equity firm MatlinPatterson and Research In Motion had all expressed interest in picking up the operations. Ericsson's winning bid is a significant blow to Nokia Siemens, which entered the initial $650 million bid and was hoping to boost its mobile infrastructure market share in North America from 5.5. percent to more than 30 percent, based on 2008 data.

Nokia Siemens attempted a positive spin: "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," said Bosco Novak, chief markets operations officer for Nokia Siemens.

Ericsson's win includes CDMA contracts with North American operators such as Verizon Wireless, Sprint Nextel, U.S. Cellular, Bell Canada and Leap, as well as LTE assets and "certain patents and patent licenses relating to CDMA and LTE," according to Ericsson. The move represents Ericsson's further charge into the U.S. equipment market; the company won a major part of Verizon's LTE network buildout and just a few weeks ago Sprint announced it would outsource its networks to Ericsson.

The move also will help Ericsson gain business as it looks to migrate CDMA customers to LTE. "CDMA will be the first markets to migrate to LTE so therefore it is important to us," Svanberg said on a conference call this morning.

Although the auction is over, it seems RIM's role in the story may not be. According to Reuters, the company is in negotiations with Nortel to purchase patents that were not part of the Ericsson transaction. And, according to the Globe and Mail, RIM may attempt to block Ericsson's purchase of Nortel's assets either through petitioning the Canadian government or through courtroom manuvers. Although RIM didn't participate in the auction, the company made a $1.1 billion bid for Nortel's wireless assets that was rejected as not conforming to the bankruptcy court's bidding rules.

For more:
- see this Globe and Mail article [1]
- see this FT article [2]
- see this Reuters article [3]
- see this NSN release [4]
- see this Ericsson release [5]

Related Articles:
Ericsson jumps into Nortel auction fray [6]  
MatlinPatterson outbids NSN on Nortel wireless assets [7]
RIM says its Nortel bid was blocked [8]
MatlinPatterson assembles telecom advisers ahead of potential Nortel bid [9]
Nokia Siemens may increase $650M offer for Nortel assets [10]