Doug on IP Comm – An independent voice on VoIP, telecom, and IP Communication

Ericsson buys Nortel wireless assets for big money

Posted on: July 25, 2009

Ericsson announced its interest in Nortel’s wireless assets late, but it came home the winner, paying $1.13 billion for Nortel’s LTE and legacy CDMA business.   The deal will likely almost double Ericsson’s revenues in North America over the short term; Nortel’s CDMA operation ran at about $2 billion last year as compared to Ericsson’s $2.7 billion in North America for the same time period.

As a part of the deal, Ericsson is expected to offer about 2,500 former Nortel employees jobs.  Ericsson says it is getting the assets debt free, so life is good.

Nokia Siemens Networks and vulture capital firm MatlinPatterson had also put in bids. NSN had reportedly put up a $650 million bid as a stalking horse offer while MatlinPatterson had offered $725 million.

Wall Street analysts view both the deal and the price offered by Ericsson as a good deal, describing the former wireless unit as “very profitable.”  They also view the CDMA purchase as a bootstrap for LTE business as customers migrate off the older technology onto (shiny new) Ericsson gear.

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