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Apr. 9, 2009

There are now reports that suggest Nokia Siemens Network (NSN) has bid on large segments of now bankrupt Nortel, including its profitable carrier networks unit and an R&D unit working on LTE technology.

Nortel does have a strong presence in North America, where Nokia Siemens has been moving rapidly to increase its overall market share.

A potential acquisition of Nortel’s carrier division unit would play an equally important role in growing the company’s North American footprint as well.

Last month, Nokia Siemens made an unsolicited offer for vital segments of Nortel’s wireless carrier division, including its profitable CDMA segment and divisions handling TDM and VoIP, according to The Wall Street Journal.

If the transaction goes through, it will likely involve the transfer of a little over 200 employees from Nortel. A Nokia Siemens Network spokeswoman declined to comment on the matter.

Acquiring Nortel's LTE R&D division would allow Nokia Siemens access to U.S. wireless carrier giant Verizon, although the carrier already went with Alcatel-Lucent and Ericsson.

“Because of the size of Verizon’s LTE deployment and footprint in the U.S., there could be room for a third player. This could put them in a much better position,” says Frost & Sullivan analyst Ron Gruia.

According to some unconfirmed reports leaked to the Journal by multiple unnamed sources, Nokia Siemens is by no means the only company trying to acquire some of Nortel's gems. Avaya, Siemens Enterprise Communications and Genband are likely potential bidders as well.

Gruia says he was unsurprised by the news of Nokia Siemens’ move to acquire strategically important segments of Nortel.

“It’s confirming rumors that had been heard at CTIA. It will give them a stronger footprint in North America and broaden the relationships they already have with Verizon Wireless, Bell and Telus Mobility,” added Gruia.

Overall, Nortel lost over $2.12 billion in the quarter before it filed for bankruptcy.

Nortel had experienced severe and ongoing declines in its revenue, as the global competition almost consumed all of its customer base and was largely burdened by an underfunded pension and with over $4.5 billion in debt obligations.

Nortel rapidly burned through cash to keep its business afloat despite multiple restructurings, spending $186 million in its third quarter to fund operations and buy capital equipment.

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Source: The Wall Street Journal.