Nortel to sell assets to Nokia
MONTREAL: Canadian telecommunications firm Nortel, in bankruptcy protection since January, will sell most of its wireless business to Nokia Siemens Networks for 650 million dollars.
Nortel also announced Friday it was making headway in discussions with other parties to sell its other businesses.
Nortel will apply to delist its common shares from trading on the Toronto Stock Exchange, the company said in a statement.
The agreement with Nokia also specifies that at least 2,500 Nortel employees can continue working with the new owner.
Nortel head Mike Zafirovski said the value of Nortel's wireless business was recognized worldwide and the agreement with Nokia represented the best path forward.
"We have determined the best way to do this is to find buyers for our businesses who can carry Nortel innovation forward, while preserving employment to the greatest extent possible," he said.
"This will ensure Nortel's strong assets -- technologies, customer relationships, and employees -- continue to play an important role in driving the future of communications.
But the announcement foreshadows the liquidation of the struggling Canadian company that was once a pillar of the country's telecoms industry.
The Nortel wireless business is the second largest supplier of Code Division Multiple Access (CDMA) infrastructure in the world.
CDMA is a channel access method utilized by various radio communication technologies that allow several transmitters to send information simultaneously over a single communication channel.
Nortel wireless does business with three of the five top CDMA operators globally, including Verizon Wireless, which operates the largest wireless voice and data network in the United States, company officials said.
Nortel said it will file the asset sale agreement with the US Bankruptcy Court in Delaware. A similar motion for the bidding procedures will be filed with the Ontario Superior Court of Justice, the company said.
Once Canada's largest company, Nortel has been struggling since the dot.com collapse.
When it filed for bankruptcy protection in both the United States and Canada in January, Nortel faced some 107 million dollars in interest on its debt alone.
The company lost 3.4 billion US dollars in the third quarter of 2008 as revenues fell 14 percent.
Last year, Nortel said it was slashing 2,100 jobs mostly in North America and would transfer another 1,000 jobs to lower-cost countries, following deep losses.
Nortel, which did business in 150 countries and had about 26,000 employees around the world in February, traces its history back to 1882 as the mechanical department of Bell Telephone Canada.
It was later known as Northern Electric and Northern Telecom before changing its name in 1999 to Nortel Networks