Nokia Siemens Networks recently entered into an agreement with Nortel which would help to develop its leadership in Long Term Evolution dubbed as LTE. The deal is a stepping stone for the company in expanding its market presence in North America.
“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. It also represents stability for Nortel’s existing customers and offers a great opportunity for employees to move into a stable future with an industry winner. The R&D organization in Canada would become a long-term wireless center of excellence within Nokia Siemens Networks, complementing our other global sites,” remarked Simon Beresford-Wylie, Chief Executive Officer of Nokia Siemens Networks.
The acquisition is estimated to be of about USD 650 million and it aims to assimilate the complementary assets of both the companies in the field of mobile radio access. It would supplement the existing talent and resources. It claims to boost Nokia Siemens Networks’ present strength and momentum in LTE.
The attainment of Nortel’s lucrative CDMA business would appreciably enhance Nokia Siemens Networks’ existence in North America. It would then be the leading supplier of wireless infrastructure products in that region.
“As Nortel’s largest customer in Canada, Bell supports Nokia Siemens’ plan to continue to foster Nortel’s long history of research and development in Canada. Such ongoing technology development is of critical importance as Bell rapidly builds out our advanced next generation wireless networks across Canada,” stated Stephen Howe, Senior Vice President of Wireless Networks and Chief Technology Officer, Bell Mobility.
The deal would bring about the transfer of more than 2,500 Nortel employees to Nokia Siemens Networks. Around 400 of those employees are designated for LTE research and development. This would empower Nokia Siemens Networks to head towards improvement and fortify its position in LTE. However, the support and development of Nokia Siemens Networks’ existing product lines would be unaffected by this acquisition.
Export Development Canada (EDC), Canada’s government-owned export credit agency, is supporting this business with a USD 300 million loan assurance. The business deal is subject to the sanction of the United States Bankruptcy Court and the Ontario Superior Court of Justice. Hearings by those courts to agree upon the bidding procedures, break-up fee and expense reimbursement will be held around June 29, 2009. The final sale hearings are anticipated on July 28, 2009 in the US and July 30, 2009 in Canada.
The deal would be concluded tentatively by the third quarter of 2009; however it remains subject to traditional closing conditions. It would also include acknowledgement of essential regulatory approvals.