Sweden's Ericsson and Austria's Kapsch CarrierCom AG will acquire certain wireless technology assets from Nortel Networks Corp, the bankrupt Canadian telecom equipment maker said on Wednesday.
The $103 million deal is the latest in a series of asset sales announced by Nortel, which filed for bankruptcy protection in January. Instead of restructuring its businesses, the company has opted to auction off assets and pay back debt holders.
Nortel, once North America's largest telecommunications equipment company, said the sale of the GSM and GSM-R assets was subject to court approvals in the United States and Canada.
GSM -- which stands for Global System for Mobile communications -- is the most popular wireless technology standard for mobile phones in the world. GSM-R is a technology used by railways.
If the courts approve the deal, Ericsson will purchase assets from Nortel's North American GSM business for $70 million, while Kapsch will pay $33 million for the remaining GSM assets and the GSM-R business.
This deal follows Ericsson's $1.3 billion purchase of Nortel's CDMA and next-generation LTE wireless technologies earlier this month.
CDMA, or code division multiple access, is the wireless technology that lost the battle for global dominance but still has a strong position in some markets. LTE, or long-term evolution, is a new high-speed wireless technology intended to replace current mobile networks.
Nortel said about 680 of its employees would receive job offers from Ericsson and Kapsch. It expects the deal to close in the first quarter of 2010.
ADDING TO ERICSSON EARNINGS
Ericsson said the deal is expected to have a positive effect on its earnings within a year after closing.
Nortel's U.S. GSM business had revenue of about $400 million in 2008.
The acquisition will also help expand Ericsson's footprint in the U.S. market, where it has a relatively weak position compared with its dominant ranking in Europe, Asia and Latin America.
The agreement includes a transfer of GSM business with North American operators such as AT&T and T-Mobile, Ericsson said.
Ericsson's North American business generated $2.7 billion of revenue in 2008, mainly from the sale of GSM and WCDMA equipment, along with associated services.
The company said its recent acquisitions and agreements had made North America its largest geographical segment. It now has about 14,500 employees in the region, up from 5,000 at the beginning of 2009.
(Reporting by Euan Rocha in Toronto and Helena Soderpalm in Stockholm; Editing by Erica Billingham and Lisa Von Ahn)