- Buyers Guide
Ericsson 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. The purchase is structured as an asset sale at a cash purchase price of $1.13 B on a cash and debt free basis. This announcement follows the completion of the auction process initiated by Nortel. Consummation of the transaction is subject to approval by the United States and Canadian Bankruptcy Courts and the satisfaction of regulatory and other conditions.
Ericsson acquires an installed base and a healthy business that provides major operators CDMA technology and support services. In addition, the acquisition strengthens Ericsson's ability to serve North America's leading wireless operators in the evolution to LTE. The acquisition significantly expands Ericsson's footprint in North America, particularly as this region is emerging as an early adopter of LTE technology. The acquisition also provides Nortel's customers with a strong and reliable supplier for the future.
The agreement includes important CDMA contracts with North American operators such as Verizon, Sprint, US Cellular, Bell Canada and Leap, as well as LTE assets, certain patents and patent licenses relating to CDMA and LTE. Nortel's customers will also benefit from the continued support of Nortel's installed CDMA base and the migration path to LTE.
"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. Furthermore, by adding some 2,500 highly skilled employees, of which about 400 are focused on LTE research and development, Ericsson reinforces and expands a long-term commitment to North America. This deal, along with our recently announced Sprint service agreement, truly positions Ericsson as a leading telecoms supplier in North America," said Carl-Henric Svanberg, President and CEO of Ericsson.
Magnus Mandersson, presently head of Ericsson Northern Europe, is appointed president of Ericsson CDMA operations, and Richard Lowe, currently president of Carrier Networks at Nortel, is appointed Chief Operating Officer.
Lowe stated, "The agreement with Ericsson provides a strong and stable future for Nortel's CDMA and LTE business. Customers will enjoy continued strong support from an industry leader as they look to evolve to LTE. Many employees will also have the opportunity to continue their work with Ericsson, bringing their innovation power and creativity to the wireless industry for years to come."
Mandersson added, "Our two companies share a long-standing commitment to technological excellence and innovation, and we look forward to welcoming the Nortel employees into Ericsson. We are truly impressed with their continuing outstanding performance during these challenging times."
Get access to premium content and e-newsletters by registering on the web site. You can also subscribe to Microwave Journal magazine.