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Ericsson, Kapsch Score Nortels GSM Assets

Telecom gear maker Ericsson (ERIC) and a smaller, Austria-based partner have won bankrupt Nortel Networks’ GSM businesses at auction thanks to a successful joint bid.

On Tuesday, Ericsson agreed to pay $70 million for the GSM/GSM-R assets in North America while Kapsch CarrierCom, with a pledged $33 million, will control the GSM/GSM-R properties outside of North America – mostly in EMEA and Taiwan. Both companies – who have worked together in the GSM world for more than 20 years – will take over Nortel’s contracts, products, patents and non-exclusive licenses in the appropriate regions.

For Ericsson, the outcome is quite a coup. The company already bought Nortel’s CDMA and LTE assets earlier this year. Now, with the addition of GSM/GSM-R technologies, it boasts a large customer base of North America’s wireless operators, including AT&T Inc. and T-Mobile. All told, the acquisitions emphasize Ericsson’s commitment to the market, said Hans Vestberg, Ericsson’s incoming president and CEO.

And once again, Ericsson plans to hire Nortel workers. The company said it will offer jobs to approximately 350 Nortel employees.

Kapsch CarrierCom, meanwhile, will hire about 330 people from Nortel.

Both sales still must receive court approvals in the United States and Canada. Nortel will pursue those permissions on Dec. 2, with a later date to be set for affected assets in France. After that, the three parties must secure regulatory and union agreements as well. Nortel, Ericsson and Kapsch CarrierCom all hope to close the transaction in 2010’s first quarter. Shareholders will not benefit from the deal.

This latest auction comes on the heels of the sale of Nortel’s Metro Ethernet Networks unit to Ciena Corp.


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