Ericsson wins Nortel LTE, CDMA auction

Swedish equipment vendor Ericsson emerged as the highest bidder for Nortel’s LTE and CDMA assets in a 12 hour auction which took place on Friday, tabling an offer of $1.13bn.

Most of the other parties known to be interested in the wireless assets of the troubled Canadian firm had publicly stated their maximum bids beforehand, perhaps giving Ericsson an indicator of how much it would need to stump up.

A degree of scrapping over the carcass of the Canadian equipment vendor had been expected, with Ericsson competing against private equity firm MatlinPatterson’s offer of $725m, Nokia Siemens Network’s $650m proposal, and Research In Motion’s (RIM) own problematic $1.1bn offer, which RIM said has been rejected by Nortel.

The acquisition will give Ericsson a bigger footprint in North America, as well as bolster the firm’s LTE technology offering. The agreement also includes CDMA contracts with North American operators such as Verizon, Sprint, US Cellular, Bell Canada and Leap.

Ericsson employs 14,000 employees in North America, which is the Swedish firm’s largest regional market. It will nowl take on another 2,500 Nortel employees as part of the deal, of whom about 400 are focused on LTE R&D.

The vendor recently picked up a seven-year network management deal from Sprint worth between $4.5bn and $5bn.

Under the agreement Sprint will retain full ownership and control of its CDMA, iDEN and wireline networks, but Ericsson will assume responsibility for the day-to-day services, provisioning and maintenance of the platforms. The renewable agreement will see around 6,000 Sprint employees transferred to Ericsson during the third quarter of 2009.