Ericsson has agreed to buy mobile network activities from Nortel in North America. The Swedish company will buy the CDMA and LTE parts of Nortel's Carrier Networks division for USD 1.13 billion cash. The deal follows an auction of the business by Nortel, and the agreement remains subject to court approval as part of Nortel's bankruptcy restructuring process. The acquisition gives a big boost to Ericsson's activities in the US, setting it up for more business with US carriers as they transition to LTE. The takeover adds 2,500 employees, including 400 focused on LTE. Ericsson beat Nokia Siemens Networks in the bidding, which confirmed it made an "opportunistic bid" in the auction. NSN earlier announced an unsolicited bid to buy the CDMA and LTE assets for USD 650 million, but Nortel organised the auction in the hope of higher offers.
Nortel supplies CDMA equipment to Verizon, Sprint, US Cellular, Bell Canada and Leap, and the CDMA activities generated USD 2.0 billion in revenues in 2008. Ericsson alone reported revenues in North America last year of USD 2.7 billion, mainly from GSM and WCDMA. When coupled with the recently announced Sprint services agreement, this acquisition makes North America the largest region within Ericsson and encompasses some 14,000 employees. Ericsson expects the takeover to add to its profits within a year of closing. Magnus Mandersson, presently head of Ericsson Northern Europe, was appointed president of the new Ericsson CDMA operations, and Richard Lowe of Nortel was named chief operating officer.