Ericsson Buys Nortel Wireless Units

Louise Nordstrom, Associated Press Writer

STOCKHOLM -- Swedish wireless equipment maker LM Ericsson(ERIC Quote) on Saturday said it had penned a deal to buy a majority of Nortel Networks'(NRTLQ.PK Quote) North American wireless business for $1.13 billion.

The Stockholm-based group said the purchase is on a cash and debt-free basis and covers the older CDMA and newer LTE wireless businesses of Nortel's Carrier Networks unit.

Nortel on Friday placed its wireless business up for auction behind closed doors in New York City, and international tech industry titans submitted their best offers for the prized division.

Nortel, a former telecommunications equipment powerhouse, sought bankruptcy protection in January and the auction was planned after the company said it planned to liquidate its business.

The deal is subject to approval by relevant authorities.

Ericsson CEO Carl-Henric Svanberg said in a statement that the acquisition would add 2,500 employees to his company, of which about 400 are focused on LTE research and development.

"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," he said.

Under the deal, Ericsson will get CDMA contracts with North American operators such as Verizon(VZ Quote), Sprint(S Quote), U.S. Cellular, Bell Canada and Leap(LEAP Quote), as well as LTE assets, and certain patents and patent licenses relating to CDMA and LTE.

According to Ericsson, Nortel's North American CDMA operations generated $2 billion last year

"Going forward, research and development costs are expected to be relatively low in CDMA compared with other technologies," Ericsson said.