Nortel 4G patents may not be worth that much

Embattled Canadian vendor Nortel may have held on to some of its key LTE patents when it flogged much of its mobile business to Nokia Siemens Networks last month, but there is some debate as to whether that IPR will be the nice little earner Nortel hopes.

The Canadian firm, which is sheltering in Chapter 11 Bankruptcy Protection, offloaded its LTE and CDMA assets to NSN late last month for $650m. However, the company held onto what has been described as some key 4G IPR assets, which could potentially bring in earnings in the form of LTE royalties.

One such figure that’s been doing the rounds is $2.9bn, and it may be that Nortel, which looks to be selling its assets off piecemeal, is looking to drive some interest in its 4G IPR. However, Stuart Carlaw, vice president and chief research officer at industry analyst ABI Research suggests that this figure is somewhat overblown.

Apparently the $2.9bn figure is based on the assumption that Nortel’s IPR would garner a royalty rate of one per cent of every LTE device sold. “This is disproportionate to their patent holdings and cannot be seen as fair and reasonable. I doubt any other single vendor will be looking for this type of return – even Qualcomm,” said Carlaw.

The researcher expects that the likes of Qualcomm will bundle LTE with other technologies in a licensing package, which will mean that the LTE portion is actually much less than their cumulative royalty rate – between two and three per cent for all technologies. So it is highly unlikely Nortel will get anything like as much as $2.9bn from its 4G assets.

Recently there has been plenty of speculation that Nortel is considering selling its controlling stake in Korean joint venture LG-Nortel, in which it is a partner with local manufacturer LG Electronics, for anything up to $1bn. It is also thought the company is still considering the sale of its crown jewels – its Metro Ethernet unit, which it took off the market in February. Nortel has only said that it is in advanced discussions with other parties with a view to selling other parts of its business.