Nokia Siemens Networks to buy parts of Canadian Nortel

2,500 Nortel workers offered chance to move to Nokia Siemens

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Nokia Siemens Networks is to purchase its Canadian competitor Nortel’s advanced wireless technology business. Nokia Siemens Networks has agreed to pay USD 650 million, or around EUR 470 million, for Nortel’s CDMA and LTE wireless infrastructure operations.
      “This agreement provides an important strategic opportunity for Nokia Siemens Networks to strengthen its position in two key areas, North America and LTE, at a price that makes good economic sense," says Nokia Siemens Networks CEO Simon Beresford-Wylie.
     
According to Beresford-Wylie, Nokia Siemens Network’s share of the North American mobile phone networks market is currently 5.5 per cent. The acquisition is expected to raise this market share to over 30 per cent.
      In practice this means that the transaction will make Nokia Siemens Networks the second largest supplier of wireless networks in North America.
      “We were extremely selective as to which Nortel business activities to bid for. With this deal there will be no overlapping with our existing business activities and range of products”, adds Beresford-Wylie.
     
Nortel, which has struggled with serious economic difficulties, sought bankruptcy protection in mid-January, while its burden of debt became insurmountable due to diminished sales.
      In recent years Nortel has cut thousands of jobs in various attempts to set its economy straight.
      The corporate acquisition will see more than 2,500 Nortel employees transferred to Nokia Siemens Networks. A third of them work in Canada, mainly in Ottawa and Calgary.
      With the deal Nokia Siemens Networks will also receive around 400 LTE research and development specialists into its ranks. The Long Term Evolution or LTE technology will enable even faster data transfer with the fourth generation mobile phones.
      Code division-based CDMA is a mobile phone technology competing with GSM. Around half of the American mobile phones currently utilise the CDMA technology.
     
Nokia Siemens Networks board member, Nokia’s chief financial officer Rick Simonson believes that with the deal Nokia Siemens Networks will receive from Nortel the operations that best suit its purposes.
      “The acquisition has a positive cash flow effect for Nokia, for Nortel’s CDMA business is profitable”, Simonson says.
      Neither Nokia nor Siemens take part in financing the transaction. Canada's export credit agency Export Development Canada (EDC) has granted a loan of US 300 million to Nokia Siemens Networks. The rest of the purchase money will come from Nokia Siemens Network’s wealth.
      Because Nortel has sought bankruptcy protection from its creditors the deal still needs court approval. In addition the normal terms of purchase have to be complied with. The different sides expect the acquisition to be completed by the end of September.
      “The deal is not yet 100 per cent certain, as Nortel’s creditors have to accept it. But of course we believe that it will materialise, for this would be in the best interest of the creditors as well”, Simonson says.


Previously in HS International Edition:
  Nokia Siemens Networks to close Espoo factory and cut 560 jobs in Finland (11.2.2009)

Links:
  Nokia Siemens Networks press release
  Nokia Siemens Networks
  Nortel press release

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