Ericsson wins Nortel's North American GSM unit
The Swedish communications giant gets the GSM operations for $70 million in cash. It had already acquired Nortel's CDMA and LTE business in North America.
Ericsson is slowly building its wireless business by scooping up parts of struggling Nortel.
Ericsson announced Wednesday that it has won a bid to buy Nortel Networks' North American GSM business for $70 million in cash. The Swedish communications giant went into the deal with a partner, Austria-based Kapsch CarrierCom, which itself spent $33 million to buy Nortel's GSM operations in Europe and Taiwan.
This marks the second major deal in recent months between Ericsson and Nortel. In July, Ericsson won another bid to pay $1.13 billion for Nortel's CDMA and LTE wireless technologies.
GSM (Global System for Mobile communications) is one of two technologies used for mobile phones. It's the standard in Europe and is dominant around the world, while CDMA (Code Division Multiple Access) is more common in the United States. In recent years, however, GSM has grabbed a larger footprint among North American carriers.
Ericsson already holds a strong slice of the global GSM market, especially in Europe, and has been eager to expand its grasp in North America.
On its end, Nortel has gradually been selling its wireless operations as a way to stay afloat in the midst of declining business and rising debts after declaring bankruptcy almost a year ago. On Tuesday, the company announced it would sell its Metro Ethernet operations to telecom equipment maker Ciena.
As part of the purchase, Ericsson will bring on more than 350 Nortel employees in North America. With the addition of Nortel's business and a recent deal with Sprint, North America will become Ericsson's biggest operation, said the company, jumping to 14,500 employees from just 5,000 at the beginning of 2009.
Ericsson noted that its entire North American business captured revenue of around $2.7 billion in 2008, mostly from sales of GSM and WCDMA (Wideband CDMA) equipment and services. Nortel's North American GSM business generated around $400 million in 2008.
No date was given for closing the deal, which is subject to the usual regulatory approvals in both the U.S. and Canada.