Nortel's Carve-Up Gathers Speed

The carve-up of Nortel Networks(NT Quote) is gathering pace with the troubled telecom equipment maker selling its share in LG-Nortel, its joint venture with Korean giant LG Electronics.

The first rumblings that Nortel was considering the sale of its controlling stake emerged last month, and the Canadian firm confirmed its exit in a statement released Wednesday.

Said to be valued at around $1 billion, the joint venture was founded in 2007 to provide telecom and networking equipment to Korea and other markets such as Russia. A profitable business that achieved an operating margin of $341 million in 2008, LG-Nortel has already clinched major deals with Korean wireless firms SK Telecom and KTF.

There has already been speculation that a rival company or private equity firm may grab Nortel's stake. Asian tech powerhouse Huawei, Providence Equity and Carlyle Group were all cited as potential buyers by the Financial Times, although none of the companies responded to TheStreet.com's request for comment.

For Huawei, Nortel's joint-venture stake would boost its profile in the lucrative Korean market, and also increase the pressure on local giant Samsung. As for the private equity firms, Providence has a major presence in the Asian telecom sector, and Carlyle Group has already worked with LG Electronics on telecom investments in Korea.

A spokesman for Carlyle Group told The Street.com that the company does not comment on rumors.

Nortel filed for bankruptcy protection in January, prompting much speculation about the company's future. However, LG-Nortel did not apply for creditor protection, and Nortel describes the joint venture as a "solvent entity" with no debt and a strong cash position.