ESPOO, FINLAND: Nokia Siemens Networks has taken a significant step toward strengthening its leadership in LTE next generation wireless technology and expanding its market presence in North America with an agreement to acquire key assets from Nortel.
The planned $650 million acquisition, which will bring together the highly complementary assets of the two companies in the field of mobile radio access, adds further key talent and resources to enhance Nokia Siemens Networks' existing strength and momentum in LTE.
The acquisition of Nortel's profitable CDMA business would significantly improve Nokia Siemens Networks' presence in North America and make it a leading supplier of wireless infrastructure products in the region.
"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," said Simon Beresford-Wylie, CEO of Nokia Siemens Networks. "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."
Existing Nortel and Nokia Siemens Networks customers welcomed the agreement. "Verizon views today's announcement as good news for the global wireless industry," said Dick Lynch, Executive Vice President and Chief Technology Officer of Verizon. "This deal brings together two important Verizon suppliers; we look forward to our continuing work with Nokia Siemens Networks."
"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," said Stephen Howe, Senior Vice President of Wireless Networks and Chief Technology Officer, Bell Mobility.
"This news eliminates industry uncertainty and enhances CDMA and EVDO, today and in the future. We at Sprint are pleased to have the support of a strong and stable supplier to continue to deliver reliable technology and services that our customers rely on every day," said Dan Hesse, President and Chief Executive Officer, Sprint Nextel.
"Bringing these assets of Nortel together with Nokia Siemens Networks is good for customers like TELUS and good for Canada," said Eros Spadotto, Executive Vice-President, Technology Strategy of TELUS. "As TELUS invests in building a next generation wireless network, we are pleased by Nokia Siemens Networks' strong desire to maintain a strong R&D presence in Canada, helping keep the country at the forefront of advanced wireless technology."
The transaction would see more than 2,500 Nortel employees -- largely located in Ottawa, Canada and Dallas, United States but also including employees in Mexico and China -- transferred to Nokia Siemens Networks.
Approximately 400 of those employees are focused on LTE research and development, and would enhance the ability of Nokia Siemens Networks to provide innovation and strengthen its position in LTE, where it is already working with customers such as NTT Docomo in Japan. 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 transaction with a USD 300 million loan commitment. "We are delighted to have secured the backing of EDC for this transaction," said Luca Maestri, Chief Financial Officer of Nokia Siemens Networks. "Nokia Siemens Networks is committed to Canada as an important center of excellence for next-generation wireless technology."
Due to Nortel's restructuring process, the transaction is subject to the approval of the United States Bankruptcy Court and the Ontario Superior Court of Justice. Hearings by those courts to approve bidding procedures, break-up fee and expense reimbursement will be held on or before June 29, 2009, with final sale hearings expected on July 28, 2009 in the US and July 30, 2009 in Canada.
Closing of the transaction, which is expected to occur in the third quarter of 2009, remains subject to customary closing conditions, including receipt of necessary regulatory approvals.