Nortel selling off GSM/GSM-R business

Bankrupt Nortel Networks, in the process of liquidating its assets, announced its GSM and GSM-R units are now on the block. The news follows the sale of the Canadian vendor's CDMA and LTE assets to Ericsson for $1.13 billion, and the sale of its enterprise solutions division to Avaya for $915 million. Also up for sale is Nortel's next generation packet core networks components business.

Nortel worked with more than 100 operators in more than 65 countries via its GSM business (which includes GPRS and EDGE). And GSM-R is a technology used on railways. Qualified bidders will be required to submit bids by Nov. 5, and an open auction will take place Nov. 9.

Nortel's GSM business unit earned $1.58 billion in 2008, according to Nortel spokesman Matthew Wray, though the company doesn't break out the numbers beyond that figure. Wray also said that following the auction, additional time likely will be required to satisfy the conditions of the bidding process and gain regulatory approval for the sale, but he did not say when he expected the entire process to be completed.

It's unclear what bidders will emerge for the businesses. The CDMA and LTE asset auction attracted bids from rival vendors Nokia Siemens Networks and Ericsson, as well as the private equity firm (and Nortel creditor) MatlinPatterson. BlackBerry maker Research In Motion also expressed interest in the assets, though it did not offer a formal bid.

In other Nortel news, the U.S. judge overseeing the company's bankruptcy case told both Nortel and the U.S. government to prepare for a trial Oct. 13 over a $3 billion tax bill the U.S. Internal Revenue Service sent to Nortel. U.S. bankruptcy court judge Kevin Gross ordered the two sides to meet today to go over any information that will be needed for the trial.

Nortel argued that the timing of the claim could indicate that the IRS was acting in bad faith. The government, for its part, said the claim was legitimate, though added that the issues are too complicated to have a trial start so soon.       

For more:
- see this release [1]
- see this Bloomberg article [2]

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