Expects to strengthen presence in North America
Ericsson has won an auction for the wireless assets of Nortel Networks. It has entered into an asset purchase agreement to acquire parts of the Carrier Networks division of Nortel relating to CDMA and LTE technology in North America.
The purchase is structured as an asset sale at a cash purchase price of $1.13bn on a cash and debt free basis. The bid is subject to approvals from the courts in the US and Canada, regulatory and other customary closing conditions and certain post-closing purchase price adjustments.
According to Ericsson, the acquisition strengthens its ability to serve North America’s wireless operators in the evolution to LTE. It claimed that the acquisition would expand its footprint particularly in North America, which is emerging as an early adopter of LTE technology.
Carl-Henric Svanberg, president and CEO of Ericsson, said: Acquiring Nortel’s North American CDMA business allows us to serve this important region better as we build relationships for the future migration to LTE. Furthermore, by adding some 2,500 highly skilled employees, of which about 400 are focused on LTE research and development, Ericsson reinforces and expands a long-term commitment to North America.”
The agreement includes CDMA contracts with North American operators such as Verizon, Sprint, U.S. Cellular, Bell Canada and Leap, as well as LTE assets, certain patents and patent licenses relating to CDMA and LTE.
Magnus Mandersson, presently head of Ericsson Northern Europe, is appointed as the president of Ericsson CDMA operations, and Richard Lowe, president of Carrier Networks at Nortel, has been appointed as the Chief Operating Officer.
Many companies have made proposals to acquire Nortel’s CDMA and LTE Access assets. MatlinPatterson bidded for $725m while Nokia Siemens Networks bid for Nortel’s wireless unit for $650m a month-ago.
Mike Zafirovski, president and chief executive officer of Nortel, said: Nortel remains focused on finding the right buyers for our other businesses while continuing to maintain excellent customer service levels. We are determined to maximise value while preserving innovation platforms, customer relationships and jobs to the greatest extent possible.”