Analyst: Nortel's LTE patent value may be overblown

Industry analysts have conflicting views over whether Nortel's LTE patents it retained instead of selling them to Nokia Siemens Networks (NSN) along with the LTE and CDMA businesses are worth a whole lot.

The bankrupt vendor, which is in the midst of offloading its various businesses and subsequently sold its LTE and CDMA assets to NSN for $650 million, held on to what is believed to be key LTE IPR assets, which could potentially bring in some hefty royalties. JP MorganChase analyst Ehud Gelblum has pegged the royalty figure as high as $2.9 billion in a recent research note.

Stuart Carlaw, vice president and chief research officer with ABI Research, believes the figure is overblown since the $2.9 billion figure is based on the assumption that Nortel's intellectual property could get a royalty rate of 1 percent of every LTE device sold.

"This is disproportionate to their patent holdings and cannot be seen as fair and reasonable. I doubt any other single vendor will be looking for this type of return - even Qualcomm," said Carlaw.

Carlaw expects that Qualcomm will bundle LTE with other technologies in a licensing package, meaning its LTE portion will be much less than its cumulative royalty rate.

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Related articles:
Nortel keeping key LTE patents
Time ticking on NSN-Nortel LTE integration
Nokia Siemens expresses confidence in wake of Nortel deal

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