Ericsson Completes Nortel Acquisition

Ericsson announced that it has completed its acquisition of Nortel Networks' CDMA business and LTE assets Friday and that the deal makes the Swedish firm's North American business the largest sales region in its global reach.

The $1.3 billion acquisition had been contested by early bidder Nokia Siemens Networks and by Research In Motion, which had complained that it was unfairly blocked from bidding for the prized assets of bankrupt Nortel.

Another important piece of Nortel -- its Enterprise Solutions unit -- is being acquired by Avaya for $900 million. Nortel, once the largest company in Canada by stock market valuation, gradually spun out of control and money following a series of accounting scandals early in the decade. The CDMA/LTE unit was considered to be the most valuable operation because most major mobile wireless carriers are planning to eventually move to LTE, many from their existing CDMA networks.

"Separately, our two companies played leading roles in freeing voice telephony from its fixed limitations," said Hans Vestberg, Ericsson's incoming president and CEO, in a statement "Together, we will do the same for broadband -- make it mobile and bring the benefits of high-speed data connectivity to the majority of the world's population."

The acquisition calls for the transfer of important CDMA contracts with North American carriers including Verizon Wireless, Sprint Nextel, U.S. Cellular, Bell Canada, Telus, and Leap. Valuable CDMA and LTE patent licenses are also transferred to Ericsson in the deal. More than 2,500 former Nortel employees are transferring to Ericsson as a result of the acquisition, bringing Ericsson's total North American headcount to 14,000.

"Ericsson will enjoy new access to North American CDMA customers and can better support CDMA networks that will transition to LTE," said Angel Ruiz, who heads the new combined unit.

InformationWeek's Informed CIO series lays out five questions to ask about unified virtualization. Download the report here (registration required).