Nokia Seimens to acquire Nortel wireless unit for $650 million

20 June 2009

Nokia Siemens is acquiring a major part of Canadian telecom giant Nortel Networks' CDMA and LTE Access business for $650 million.

Nortel is also talking to others to sell its optical networking, enterprise and wire line communication gear.

Once the largest company in Canada, Nortel had sought bankruptcy protection in Canada, the US and Europe in December 2008 after losing nearly $7 billion since 2005, bogged down with a $6.3 billion debt and a $2.8 billion deficit pension fund. (See: Nortel files for bankruptcy protection in Canada, US and Europe)

With the ongoing global economic slowdown, Nortel has found it difficult to sell its assets although Nortel president and chief executive Mike Zafirovski, hired in 2005 to turn the company around, said an orderly sale of company assets was the best way to preserve value.

The 127 year-old Nortel had reportedly rejected an earlier $850 million offer from Nokia Siemens for the wireless business and some parts of the Nortel wire line communication gear business in March, since Nokia Siemens offered to absorb only a small number of Nortel employees.
This time around, Nokia Siemens, a joint venture of Nokia of Finland and Siemens AG of Germany, is prepared to absorb more than 2,500 Nortel employees, mainly those located in Ottawa in Canada and Dallas in the US, and employees in Mexico and China.

Approximately 400 of those employees are specialists in LTE research and development, and would help Nokia Siemens Networks to enhance innovation and strengthen the European company's position in LTE, where it is already working with customers such as NTT Docomo in Japan.
At one time Nortel had over 90,000 employees on its payroll, since reduced to about 30,000.