Sale of LTE & CDMA business to Nokia Siemens spells the end for Nortel

Stuart Corner
Sunday, 21 June 2009 09:13

Business IT - Technology

Nortel is to sell almost its entire CDMA business - the world's second largest - and its LTE assets to Nokia Siemens Networks for $US650m under a deal supported by Canada's government-owned export credit agency, Export Development Canada (EDC) with a $US300m loan commitment.

The sale agreement specifies that at least 2,500 employees - about 400 of whom are working on LTE R&D - will have the opportunity to continue with NSN, a figure, which Nortel says "represents a significant portion of the employees associated with the assets being sold."  Nortel says the deal represents the best way to maximise value while preserving innovation, customer relationships and jobs to greatest extent possible.

Nortel claims to be the second largest supplier of CDMA infrastructure in the world. It has business with three of the five top CDMA operators globally, including Verizon Wireless, which operates the largest wireless voice and data network in the United States.

NSN said the deal would bring together highly complementary assets and that Nortel's profitable CDMA business would significantly improve its presence in North America and make it a leading supplier of wireless infrastructure products in the region.

The Ottawa Citizen reported that "EDC has been a vital financing lifeline to Nortel as other lenders fled in recent years as its fortunes fell. It provides the vital financing that allows Nortel's international deals to go forward. But EDC appears to have had second thoughts about the prospects for Nortel survival as an independent entity."

Nortel has also effectively signalled the end of the once great Canadian company, which has been operating under bankruptcy protection since January 2009. The company said it was also advancing its discussions with external parties to sell its other businesses, and was planning to delist its shares from the Toronto Stock Exchange, leaving shareholders with nothing.

Nortel's regional operating companies were not included in the bankruptcy protection filing and the company maintains that they have continued to operate normally. It made no comment on their future in this latest announcement.

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