Ericsson, Kapsh Now Own Nortel's GSM/GSM-R Assets

Bankrupt Nortel Networks Corp. has closed the sale of its GSM/GSM-R business to Ericsson (ERIC) and a smaller, Austria-based partner, Kapsch CarrierCom.

Ericsson and Kapsch paid a total of $103 million – $70 million and $33 million, respectively. Ericsson bought the North American GSM business while Kapsch got the EMEA and Taiwan GSM assets, as well as the global GSM-R properties. The two companies – who have worked together in the GSM world for more than 20 years – will take over Nortel’s contracts, products, patents and non-exclusive licenses in the appropriate regions.

For Ericsson, the outcome is quite a coup. The company already bought Nortel’s CDMA and LTE assets earlier this year. Now, with the addition of GSM/GSM-R technologies, it boasts a large customer base of North America’s wireless operators, including AT&T Inc. (T) and T-Mobile.

When Ericsson and Kapsch announced their intent to buy the GSM/GSM-R businesses last year, they also agreed to hire Nortel workers. Ericsson will offer jobs to about 350 of them while Kapsch plans to hire about 330.

“We wish our transferring employees well, knowing that they are taking their considerable expertise to Ericsson and Kapsch,” John Doolittle, CFO of Nortel, in a prepared statement.

As happened with all of its other auctioned units, Nortel shareholders won’t benefit from the Ericsson-Kapsch sale.