Nortel Completes Wireless Sale to Ericsson

As 2009 begins to wind down, so too does the final chapters in the asset sell-off of bankrupt telecom networking vendor Nortel.

Today Nortel announced that it had officially completed the sale of its wireless CDMA and LTE assets for $1.13 billion to Swedish wireless vendor Ericsson. The deal gives Ericsson control over a large portfolio of wireless assets and brings 2,500 former Nortel employees to Ericsson.

Nortel put its wireless business up for sale earlier this year after filing for bankruptcy protection in January.

The first wireless bid came in June from networking vendor Nokia-Siemens for $650 million in what is known as a stalking horse auction. In a stalking horse asset sale, the first bidder sets the beginning price for the auction, but could potentially be outbid, which is what ultimately happened to Nokia-Siemens.

In July after a month of bidding, Ericsson came out on top of Nokia-Siemens, providing a final winning bid of $1.13 billion.

Aside from Nokia-Siemens, the deal was also opposed by Canadian wireless giant Research in Motion (RIM) makers of the popular Blackberry smartphone.

RIM’s opposition led to a Canadian government hearing in August, which could potentially have derailed the deal.

With today’s close all of the objections have been overcome and the deal has received all the necessary court and regulatory approvals in both Canada and the U.S.

Positive prospects for customers

“Completion of this first large-scale divestiture is a major milestone in Nortel’s plan to preserve the value of its innovation and know-how while maximizing value through the sale of its businesses,” said Pavi Binning, Nortel’s chief restructuring officer, in a statement. “As we stated following July’s auction, the sale of our CDMA business and LTE Access assets to Ericsson represents a very positive prospect for our customers, our employees and for many of our other stakeholders.”

Nortel is still in the process of closing the sale of its enterprise business unit. Avaya emerged as the winner of the enterprise bidding process with a winning price of $900 million. The Avaya deal is being reviewed by the Canadian Government as part of the deal completion process.

There is still one major business unit that Nortel is trying to sell – its’ optical networking and Carrier Ethernet business unit. To date the only public bidder has been networking vendor Cienna. The auction for the optical networking and Carrier Ethernet business unit was originally scheduled to occur today, but has now been pushed back to Tuesday November 17th.

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