Ericsson Picks Up Nortel’s GSM Assets

Nortel today announced the winning bidder for its GSM and GSM-R wireless business units — a $103 million, all-cash joint bid from Swedish mobile vendor Ericsson and Austrian telecom Kapsch CarrierCom.

GSM and GSM-R (GSM for railroads) are popular wireless technology standards that Nortel has been deploying with customers around the world. Nortel is set to seek court approval in the U.S and Canada for the GSM sell-off on Dec. 2, with the deal expected to close in the first quarter of 2010.

As part of the proposed deal, Kapsch will acquire the European and Taiwan GSM businesses as well as the global GSM-R business. Ericsson will acquire the North American GSM business.

The move marks the latest asset sale by Nortel, which put its wireless business units on the auction block earlier this year after filing for bankruptcy protection in January.

Since then, Ericsson has been leading the charge in picking up assets from the beleaguered Nortel. The company’s GSM auction follows Nortel’s sale of its CDMA and LTE wireless technologies to Ericsson for $1.13 billion, in a transaction that was formally completed on Nov. 13.

“This is a major step forward for our business. These acquisitions will enable our customers to continue to benefit from the product innovation and support that they’ve come to expect from us,” Graham Richardson, general manager for the GSM/GSM-R business at Nortel, said in a statement. “Today’s announcement is also a turning point for our employees, the majority of whom will take their considerable expertise on to Ericsson and Kapsch.”

At this early stage, Nortel expects that approximately 680 Nortel GSM/GSM-R employees will move on to their units’ new owners when the deal closes.

In addition to the employees, existing Nortel GSM and GSM-R customer contracts and patents related to the two wireless technologies will be taken over by the bidders once the deal closes.

Looking beyond the GSM/GSM-R business, Nortel is now working to officially close the sale of two other business units.

In September, Avaya emerged as the winner of the enterprise bidding process with a winning price of $900 million. That deal is now being reviewed by the Canadian Government as part of the deal completion process.

Earlier this week, Nortel announced that Ciena had won the auction for Nortel’s Optical Networking and Carrier Ethernet business unit, with a bid of $769 million. A court hearing is also scheduled for Dec. 2 before that transaction is approved.