Nortel to sell wireless tech arm to Nokia Siemens
Published: 22 Jun 2009 10:02 BST
Nokia Siemens Networks will buy Nortel Networks's wireless technology business for $650m.
Nortel, a former giant in telecoms equipment, filed for Chapter 11 bankruptcy in January with hopes of reorganising.
Nokia Siemens said on Friday it will use Nortel's CDMA and LTE technology to expand its presence in north America. CDMA, or code division multiple access, is one of the two major networks operating in the US and is used by Verizon Wireless and Sprint. LTE, or Long Term Evolution, is 4G wireless technology that will potentially replace today's mobile networks.
"This agreement provides an important strategic opportunity for Nokia Siemens Networks to strengthen its position in two key areas, north America and LTE, at a price that makes good economic sense," Nokia Siemens chief executive Simon Beresford-Wylie said in the statement.
As part of the deal, about 2,500 Nortel employees in the US, Canada, Mexico and China can keep their jobs. Nortel said those staff represent a "significant portion" of the workers associated with that part of its business.
"Maximising the value of our businesses in the face of a consolidating global market has been our most critical priority. We have determined the best way to do this is to find buyers for our businesses who can carry Nortel innovation forward, while preserving employment to the greatest extent possible," Nortel chief executive Mike Zafirovski said in a statement.
Toronto-based Nortel also said it is working towards selling off the other parts of its business and that it is applying to be delisted from the Toronto Stock Exchange.
The deal with Nokia Siemens, which is expected to close in the third quarter, must be approved by both US Bankruptcy Court and the Ontario Superior Court of Justice.
Nortel was founded in 1895 as Northern Electric and Manufacturing and supplied telecoms equipment for Canada's telephone system. At the height of its success about 10 years ago, Nortel was worth $250bn (£150bn) and had more than 90,000 employees.
Credit: Gasping for air, Nortel to sell off wireless tech from CNET News
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