Ericsson to Acquire Nortel’s GSM Unit Along with Kapsch

Some of the last pieces of Nortel’s business, its GSM units, will be sold in two parts for $103 million. 

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Ericsson will acquire most of Nortel's GSM business

Telefonaktiebolaget LM Ericsson will purchase the North American GSM business for $70 million and Kapsch CarrierCom of Austria will acquire most of the remaining assets, mostly in Europe and Taiwan, for $33 million.

For Ericsson, the acquisition further solidifies its footprint in North America as the agreement includes the transfer of Nortel’s relationships with mobile operators such as AT&T and T-Mobile.  In July of this year, Ericsson emerged as the winner for Nortel’s CDMA and LTE Access units, gaining key relationships with Verizon Wireless, Sprint, and Bell Canada.  Nortel’s North American GSM operations generated ca. $400 million in revenue in 2008.  That deal has the potential to double the company’s revenue in the region.

“The transaction emphasizes Ericsson’s commitment to the North American market and strengthens our position as the leading provider of telecommunications technology and services in the United States and Canada.” said Hans Vestberg, Ericsson’s incoming President and CEO.

680 Nortel employees are expected to receive offers of employment from either Ericsson or Kapsch.  GSM (Global System for Mobile communications) is the most popular wireless technology standard for mobile phones in the world.  Nortel has been one of the world’s leading suppliers of GSM networks for many years.

Earlier this week, Nortel announced that Ciena, a network infrastructure company, was the successful bidder for the company’s Optical Networking and Carrier Ethernet businesses (see item in this issue under Mergers and Acquisitions).

The sale to Ericsson and Kapsch is subject to court approvals in the U.S. and Canada, which Nortel will seek at a joint hearing on December 2, 2009, and at a later date in France, as well as certain regulatory approvals and other customary closing conditions.

David M. Goldes is the president of Basex.

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