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Aug. 7, 2009

Officially now under bankruptcy protection, Nortel today has defended the sale of its CDMA division and access to its LTE technology assets to Ericsson, saying it’s a good deal for Canada.

Nortel said this morning in a statement, which coincided with an appearance before the Canadian House of Commons Standing Committee on Industry, Science and Technology “it preserves a great number of Canadian jobs and places LTE technology in the hands of a global leader that is already an important Canadian player, and will do so for sustained growth for many years to come.”

The emergency meeting was called in an effort to bring more clarity to what some view as a complicated and controversial auction process.

Government officials from Industry Canada, Ericsson and Mike Lazaridis, president of BlackBerry maker Research In Motion (RIM) attended the meeting.

Nortel was quick to point out that courts both in Canada and the U.S. closely oversaw the assets sale process and found it was properly managed and that the courts approved the sale.

Nortel added that the sale to Ericsson doesn't pose a concern with regard to any issue of Canadian national security, and that in the last ten years, the company has not been able to use federal R&D tax credits to fund CDMA and LTE technology development in Canada.

In fact, Nortel has suffered large and cumulative tax losses since 2001.

Based in Waterloo, Ontario, Research In Motion made a failed bid for Nortel assets in mid-June and it complained that it was shut out of the auction process.

Nortel publicly replied as many as three times that RIM could have easily increased its offer at any time during the bidding process if it wanted to, but decided not to.

RIM later withdrew its bid altogether.

Swedish-based Ericsson won the licenses to Nortel's LTE technology, along with other wireless assets with its $1.13 billion bid.

Responding to some criticism coming from the House of Commons and aimed at Industry Canada, Ericsson said earlier this morning that, for the past 60 years, it has been a major telecom infrastructure player in Canada and has an important R&D center in Montreal.

Additionally, Ericsson added that it has supplied the Canadian federal and some provincial governments with some of its technology and telecom products for over 30 years, and that even though it still has his global headquarters in Sweden, Ericsson is still viewed by most in the industry as a Canadian player.

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Source: Nortel Networks Inc.