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11/30/2009
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Ericsson To Buy Nortel GSM Unit For $70 Million

Nortel's European and Taiwanese GSM and GSM-R operations will go to Kapsch CarrierCom.

Ericsson moved to acquire Nortel Networks' North America GSM operation for about $70 million as Nortel's dismemberment nears completion. Previously, Ericsson entered into an agreement to acquire Nortel's prized CDMA/LTE unit for $1.3 billion.

In the most recent auction, Nortel also sold GSM operations in Europe and Taiwan to Kapsch CarrierCom AG, which also acquired GSM-R (GSM for railways) from Nortel. Kapsch paid about $33 million for the Nortel operations.

While the breakup of Nortel, which has been in bankruptcy proceedings since January, has been a painful experience for Nortel's employees, the acquiring firms have retained the great majority of Nortel employees. According to media reports from Nortel's Canadian headquarters, Ericsson plans to offer employment to 350 Nortel GSM employees while Kapsch expects to hire 330 Nortel employees.

Graham Richardson, general manager of Nortel's GSM/GSM-R business, said the transaction is "a turning point for our employees, the majority of whom will take their considerable expertise on to Ericsson and Kapsch."

Ericsson previously said it would offer employment to more than 2,500 employees in Nortel's CDMA/LTE operation and Ciena, which has committed to acquire Nortel's optical networking and carrier Ethernet business unit, has said it plans to offer jobs to at least 2,000 Nortel employees.

Ericsson has noted that its North American operations are the Swedish firm's largest global operation.

The GSM/GSM-R acquisitions are subject to approval by regulatory agencies in Canada, the United States, and France later this week. Nortel said it expects the sale to be completed in the first quarter of 2010.

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