Nokia Siemens Buys Nortel for $650 Million

Saturday, Jun 20, 2009  |  Updated 7:47 AM EDT
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Nokia Siemens Buys Nortel for $650 Million

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Nokia Siemens Networks absorbs a competitor.

HELSINKI – Nokia Siemens Networks said Saturday it will buy the wireless operations of Canadian-based Nortel Networks in a $650 million deal to strengthen its position in North American markets.

The Finnish-German joint venture said it will purchase the LTE and CDMA assets of Nortel, a former telecom equipment giant now operating under bankruptcy protection.

CDMA, or code division multiple access, is a rival standard to the dominant cellular standard GSM, or global system for mobile, while Long Term Evolution, or LTE, is a next-generation wireless network technology.

The transaction is subject to the approval of U.S. and Canadian courts because of Nortel's bankruptcy process, Nokia Siemens said, adding it expected such approvals by July. It described the planned acquisition as "a significant step towards strengthening its leadership" in LTE wireless technology.

"The acquisition of Nortel's profitable CDMA business would significantly improve Nokia Siemens Networks' presence in North America and make it a leading supplier of wireless infrastructure products in the region," the Espoo, Finland-based company said.

Nokia Siemens Networks is a joint venture of Nokia Corp., the world's top mobile phone maker, and German Siemens AG. It employs 60,000 people worldwide.

Under the deal more than 2,500 Nortel employees, mostly in Canada and the United States, would be transferred to Nokia Siemens Networks. Canada's government-owned export credit agency, Export Development Canada, would support the transaction with a $300 million loan commitment, Nokia Siemens said.

Toronto-based Nortel reported a first-quarter net loss this year of US$507 million with revenue falling by 37 percent from 2008 to $1.7 billion.

Nortel's customers, including Bell — Canada's leading telecommunications company — welcomed the deal which Nokia Siemens said would ensure the continuation of Nortel's research and development sector.

"As Nortel's largest customer in Canada, Bell supports Nokia Siemens' plan to continue to foster Nortel's long history of research and development in Canada," said Stephen Howe, spokesman for Bell Mobility.

"This news eliminates industry uncertainty and enhances CDMA ... today and in the future," said Dan Hesse, CEO of Kansas-based Sprint Nextel.

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