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Summary:

Ericsson says it has entered into an asset purchase agreement to acquire the parts of the Carrier Networks division of Nortel relating to CDMA and LTE technology in North America for an estimated price of about $1.13 billion. Ericsson beat out other bidders Nokia Siemens Networks […]

Ericsson says it has entered into an asset purchase agreement to acquire the parts of the Carrier Networks division of Nortel relating to CDMA and LTE technology in North America for an estimated price of about $1.13 billion. Ericsson beat out other bidders Nokia Siemens Networks (NSN) and private equity firm, MatlinPatterson Global Advisors. NSN had bid $650 million for the business back in June. According to a Nortel spokeswoman, the deal does include some intellectual property rights, but excludes a small number of 4G wireless patents. We’ll have to wait till Monday, when the two companies plan to have a conference call to share the details with rest of us. The Swedish giant expects this acquisition will help it expand its footprint in North America and strengthen its ability to serve North America’s leading wireless operators in the evolution to 4G LTE. Ericsson recently took over the management of Sprint’s wireless networks as well. The company will get important 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.

Nortel’s North American CDMA operations generated approximately $2 billion in revenues for 2008 and were profitable. Ericsson’s North American business generated $2.7 billion in sales for 2008, much of it coming from the sale of GSM and WCDMA equipment and services. If Ericsson does manage to swallow this business, it would become one of the key suppliers of LTE equipment, whose demand is expected to shoot up as the majority of the world’s carriers transition to 4G wireless networks. Ericsson knows that, and that is why it was aggressive in bidding for this business unit.

“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,” said Carl-Henric Svanberg, president and CEO of Ericsson, in a statement. Here is a link to the Nortel press release.

  1. That’s a bargain with all those 4G patents. LTE is teh awesome.

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  2. The sale doesn’t include the 4G patents. Just usage of equipment and software

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    1. Steve

      I checked with Nortel and they say that the sale does include some intellectual property rights, but excludes a small number of 4G wireless patents.

      Do you happen to have more details that you can share with us?

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  3. I’ve been following this deal for multiple reasons, including the fact that the company where I serve as a CIO uses some Nortel gear (but not carrier equipment).

    The big question is what happens to Nokia Siemens now? One of the better analyses I have seen comes from Jonathan Spira of Basex at http://www.basexblog.com/2009/07/25/impact-of-ericssons-nortel-victory-on-nokia-siemens/

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  4. I always thought it was weird to “agree” to buy as if the acquirer were being pressured?

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  5. Matt Wellington Saturday, July 25, 2009

    I’ve been following this deal for multiple reasons, including the fact that the company where I serve as a CIO uses some Nortel gear (but not carrier equipment).

    The big question is what happens to Nokia Siemens now? One of the better analyses I have seen comes from Jonathan Spira of Basex at http://www.basexblog.com/2009/07/25/impact-of-ericssons-nortel-victory-on-nokia-siemens/

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  6. probably not good for ALU, NSN – but those two were mergers, which caused them to screw themselves. maybe this will what trip up E\\. their history with mergers (Marconi, Redback) has not been stellar either.

    in any case good for sprint.looks like to me – bye bye wimax & hello lte on the now network…:)

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  7. This demonstrates the difference between a financial buyer and a strategic buyer … it would cost a billion and years just to get the customer base … no such thing as a free lunch … LM Ericsson, great move …

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