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7/22/2009
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RIM Eager To Bid For Nortel Assets, But Thwarted

The Blackberry maker says it is prepared to offer more than what Nokia Siemens Networks bid for Nortel's wireless business, including CDMA and LTE assets.

The stalking horse auction for Nortel Network's coveted CDMA and LTE access business has turned into a full-fledged horse race as Research In Motion said it is prepared to offer $1.1 billion for the Nortel assets, which is substantially more than the previous $650 million offer by Nokia Siemens Networks or the $725 million by a group of Nortel bondholders.

The initial bid by Nokia Siemens was contested by bondholder MatlinPatterson, and the two were mired in litigation in a Delaware court. RIM then entered the fray this week, complaining that it had been shut off from the bidding.

"RIM has found itself blocked at every turn," said Jim Balsillie, the Canadian firm's co-chief executive, in a statement. Balsillie played the Canadian card for the assets of Nortel, its Ontario neighbor. "RIM is extremely disappointed that Nortel's world leading technology, the development of which has been funded in part by Canadian taxpayers, seems destined to leave Canada and that Canada's own Export Development Corporation is preparing to help by lending $300 million to another bidder," said Balsillie.

Nortel, which has been in bankruptcy proceedings for months, has said RIM was kept from bidding because RIM didn't comply with court procedures.

"RIM sought to be qualified as a qualified bidder in Nortel's auction bidding process for the Wireless Business (CDMA and LTE), but RIM was told it could be qualified only if it promised not to submit offers for other Nortel assets for a period of one year," RIM said in a statement. RIM has said it plans to bid on other Nortel assets.

At the heart of the dispute is CDMA technology, and particularly LTE, which is beginning to emerge as the next wave of wireless infrastructure technology. For instance, Verizon Wireless is expected to begin deploying LTE later this year. LTE advocates are arguing that the LTE technology represents wireless technology that is orders of magnitude more robust than anything on the market today.

Also in the background is the ongoing handset competition between Nokia Siemens Networks' Nokia handsets and RIM's BlackBerry handsets.

The "certain other Nortel assets" that Balsillie noted likely refer to patents and intellectual property, because Nortel is said to own valuable LTE intellectual property. In recent days, RIM paid Visto Corp. $267 million to settle their lengthy patents litigation and it would find it attractive to obtain any relief it could get from future patent litigation. RIM has paid out hundreds of millions of dollars for patents in recent years.


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