Nortel accepts Nokia Siemens bid for wireless assets

Company prepares also to sell rest of company and delist stock

Nortel Networks has entered into an agreement with Nokia Siemens Networks to sell its its wireless network infrastructure business assets for $US650 million, it said on Friday.

Reports of the company's interest in Nortel's wireless assets surfaced back in April, and the two have now entered into a so-called stalking horse agreement, which means that it's an initial bid on the assets from a party chosen by the bankrupt company -- in this case Nortel.

Other telecom vendors, including Ericsson and Huawei, will also get a chance to bid.

Nortel filed for bankruptcy protection in January. Back then the company said it would undertake "a comprehensive business and financial restructuring" and expected to emerge from the bankruptcy process "more focused, financially sound and competitive".

In the end, though, it has been forced to sell off its assets piece by piece.

In addition to the sale of its CDMA (code-division multiple access) business and LTE (Long Term Evolution) wireless access assets is currently in discussions with other companies to sell the rest of its businesses.

However, it is also assessing other restructuring alternatives if it is unable to get a high enough bid, the company said. Besides wireless networks, Nortel's current range of products includes optical networks, security products and unified communication solutions.

The company will also delist its shares from trading on the Toronto Stock Exchange. Shareholders are expected to walk away empty-handed, according to Nortel.

The agreement with Nokia Siemens specifies that at least 2,500 employees would have the opportunity to continue working for the Finnish and German company. The number represents "a significant portion of the employees associated with the assets being sold," Nortel said, without going into detail.

A deal with Nortel will allow Nokia Siemens to strengthen its position in North America and in the burgeoning market for LTE equipment, which provides a future upgrade path for mobile network operators. Nokia Siemens will get the business "at a price that makes good economic sense", it said.

Nokia Siemens needs to do something to help it acquire new operator customers, according to Mark Newman, chief research officer at market research company Informa Telecoms and Media.

Today it trails Ericsson and Huawei, and buying Nortel's wireless business will indeed give it a foot-hold in North America, Newman said.

It isn't the first time European and a North American telecom vendors have merged. The merger of Alcatel and Lucent has been a mixed bag, and they have had a difficult time becoming one company, according to Newman.

Overcoming the cultural divide will be easier for Nokia Siemens and Nortel, since the latter is so much smaller, but the difficulty of reconciling different business cultures shouldn't be underestimated, Newman said.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags wirelessnortelmergers & acquistionsNokia Siemens

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Mikael Ricknäs

IDG News Service
Show Comments

Father’s Day Gift Guide

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?