Ericsson, Kapsch to buy, split up Nortel's GSM business units

TORONTO - LM Ericsson and another European company have been selected to jointly purchase the GSM wireless technology business auctioned off by Nortel Networks Corp., which has accepted a joint bid worth US$103 million.
Published : November 26, 2009

TORONTO - LM Ericsson and another European company have been selected to jointly purchase the GSM wireless technology business auctioned off by Nortel Networks Corp., which has accepted a joint bid worth US$103 million.

The insolvent Canadian telecom equipment maker said early Wednesday that Sweden-based Ericsson and Austrian company Kapsch CarrierCom teamed to make the bid, which would split the GSM business units between them.

About 680 Nortel employees will receive offers of employment from the bidders, Nortel said.

Ericsson will purchase assets tied to Nortel's North American Global System for Mobile (GSM) business while Kapsch will acquire assets relating to a sales region covering Europe, the Middle-East and Africa and Nortel's Taiwan GSM businesses. Kapsch will also purchase the assets of the GSM-R business.

Ericsson, a long-time global rival of Nortel, has had a significant research and development operation in the Montreal area for many years and is poised to use Nortel people and technology to bolster its North American presence.

The Swedish company has also paid US$1.13 billion to buy substantially all of Nortel's CDMA Business and LTE Access assets, which make technology for wireless networks that use a different standard from GSM.

As part of that deal, which closed Nov. 13, Ericsson has agreed to offer jobs to 2,500 former Nortel employees.

The sale of Nortel's GSM business units to the European companies is part of the selloff of Nortel, formerly one of the world's premier telecom equipment companies, and is subject to court approvals in the U.S. and Canada.

Nortel said it will seek the courts' approval at a joint hearing on Dec. 2.

The auction of the GSM business units got underway Tuesday morning after being deferred by Nortel.

The global GSM/GSM-R business includes patents predominantly used in the GSM business and granting of non-exclusive licenses of other relevant patents.

Nortel bumped the original GSM auction date to make room for its optical networking and carrier Ethernet units auction. Ciena Corp. won that auction and will pay US$769 million for the division.

The former Canadian technology heavyweight, has been selling off its divisions after filing for creditor protection in January.

 
 
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