Swedish Telecom gear manufacturer, Ericsson emerged the clear winner in Nortel’s auction to offload its North American wireless assets which mainly cater to CDMA platform including LTE.

In an auction process the deadline for which was July 22, Ericsson’s $ 1.13 billion was the highest bid value for the bankrupt Nortel. The move of Nortel offloading its stake in wireless assets first came into highlight when Nokia Siemens Networks (NSN) issued a statement conveying the same. NSN had offered $ 650 million. It thereby gained first right of refusal over any bid amounts offered higher than its value.

Subsequently even Research in Motion expressed its desire to acquire Nortel’s assets. But the so-called unfair terms and conditions laid down by Nortel restricted its bid offer. RIM had bid $ 1.1 billion while New York-based private equity fund, MatlinPatterson Global Advisers LLC. Ericsson was earlier reported to have bid $ 730 million.

The latest developments leads to Ericsson and Nortel entering into asset purchase agreement. Subject to court and customary regulatory approvals, the deal will be on a cash and debt free basis. Ericsson also said that all 2,500 Nortel employees working in North America will be absorbed by it.

"Acquiring Nortel''s North American CDMA business allows us to serve this important region better as we build relationships for the future migration to LTE. Furthermore, by adding some 2,500 highly skilled employees, of which about 400 are focused on LTE research and development, Ericsson reinforces and expands a long-term commitment to North America. This deal, along with our recently announced Sprint service agreement, truly positions Ericsson as a leading telecoms supplier in North America," said Carl-Henric Svanberg, President and CEO of Ericsson.

Nortel’s North American operations recorded $ 2 billion in revenues in 2008 while Ericsson managed $ 2.7 billion. North America thereby becomes Ericsson’s largest operations with combined employee strength of 14,000. Ericsson expects to see positive result from the acquisition within a year’s time. Ericsson’s Head of North Europe operations, Magnus Mandersson has been appointed as President of Ericsson CDMA operations, and Richard Lowe, Nortel, is appointed Chief Operating Officer.

"Our two companies share a long-standing commitment to technological excellence and innovation, and we look forward to welcoming the Nortel employees into Ericsson.  We are truly impressed with their continuing outstanding performance during these challenging times," said Magnus Mandersson, President of Ericsson CDMA operations.

"The agreement with Ericsson provides a strong and stable future for Nortel's CDMA and LTE business. Customers will enjoy continued strong support from an industry leader as they look to evolve to LTE. Many employees will also have the opportunity to continue their work with Ericsson, bringing their innovation power and creativity to the wireless industry for years to come," said Richard Lowe, President of Carrier Networks at Nortel.

NSN tried to play down the failure as a company statement said, “Our final offer for Nortel’s assets represented a fair price, and we did not enter this process with a win-at-any-cost mindset,” said Bosco Novak, Chief Markets Operations Officer, Nokia Siemens Networks. “Ours was an opportunistic bid aimed at supporting the great progress we’ve made in North America in the past 18 months, and we are very confident that momentum will continue to grow.”

The company said that it remains committed to its business focus in the North American region. North America remains NSN’s biggest revenue contributor.

Nortel’s customers in North America include Verizon, Bell, Sprint Nextel and TELUS. Nortel’s India clients include Airtel, BSNL and Reliance Communications. Ericsson too serves Airtel and BSNL in India. It additionally is a major technological partner for Vodafone Essar while also serving Idea Cellular and Aircel in some capacity.