Canada Okays Ericsson’s Nortel Wireless Acquisition

Canada’s federal government has decided not to review Ericsson’s $1.13B acquisition of Nortel’s wireless assets.

According to Industry Minister Tony Clement, the deal is beneficial to Canada and no national-security concern exists to warrant a federal review. It’s bad news for Research In Motion (RIM), which was hoping the Canadian government would intervene on its behalf.

Even though Nortel did not cede ownership of the LTE patents when it auctioned off its wireless business, Ericsson obtained the rights to license the patents on a non-exclusive basis.

Although RIM hasn’t explicitly revealed its designs on Nortel, the Blackberry vendor appears to want to own the LTE patents and all the licensing rights associated with them. If RIM were to own the patents, it would not want a major licensee, such as Ericsson, getting them at no charge.

Nortel has yet to indicate how it will dispose of the LTE patents.

Ericsson, which has 1,900 employees in Canada, will welcome 800 Nortel employees into its corporate bosom. That was one of the reasons Clement claimed the acquisition would contribute to Canadian jobs as well as to ongoing technological innovation in the country.

The news isn’t as good for many employees in Nortel’s enterprise business, won at auction earlier this week by Avaya. A Canadian Press report suggests that approximately 40 percent, or 400, or Nortel’s enterprise employees in Canada could lose their jobs.

Next up for grabs in the ongoing Nortel dissolution is the company’s Metro Ethernet Networks (MEN) business unit. While initial estimates suggested the MEN assets might go for $750 million, some analysts now say they could fetch as much as $1.5 billion.

Given the relatively high amounts that Nortel’s wireless and enterprise assets have drawn at auction, I wouldn’t summarily dismiss the possibility that the MEN assets will attract similarly strong bids. That said, I don’t see the same competition for the MEN assets that existed for the others.


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