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Airvana: Ericsson Makes Good on Unpaid Nortel Bills

Airvana Inc. (AIRV) is receiving nearly $40 million as Ericsson (ERIC) makes good on bills bankrupt Nortel Networks’ wireless division never paid.

Ericsson won Nortel’s CDMA and LTE assets at auction this past summer; the deal closed last week and Airvana, which specializes in mobile broadband gear, is among the vendors at last collecting payment for products sold, services rendered and interest accrued.

Nortel filed bankruptcy on Jan. 14, 2009, and owed Airvana $39.6 million at the time. Now, Airvana’s contract with Nortel is transferring to Ericsson.

“Ericsson’s acquisition of the CDMA unit is an excellent outcome both for Airvana and for customers of Nortel’s North American wireless business,” Randy Battat, Airvana’s president and CEO, said in a prepared statement.

Airvana will apply $36.4 million toward product and service billings, and the remaining $3.2 million will be accounted for as interest income. The payment will give Airvana “additional financial flexibility at a time of growing opportunity for both our EV-DO and femtocell product lines,” Battat said.

Nortel filed Chapter 11 bankruptcy the day before it was slated to make a $107 million debt payment. Many experts and observers had hoped the legendary company would emerge from insolvency intact but it has instead been forced to sell itself off, piece by piece.

Ericsson won Nortel’s wireless properties for $1.13 billion in a hotly contested auction on July 24. The deal gives Sweden-based Ericsson a huge North American presence, as well as a lead in CDMA and LTE technologies and contracts. For example, Ericsson is inheriting contracts with operators including Verizon, Sprint, U.S. Cellular, Bell Canada and Leap Wireless.

Ericsson further is taking on approximately 2,500 Nortel employees.


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