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Nortel Selects Ericsson and Kapsch as Successful Bidders for GSM/GSM-R Business
Posted: 25-Nov-2009 [Source: Nortel]

[Ericsson and Kapsch are the winning joint bidders of Nortel's GSMGSM-R business with a purchase price of US$103 million in cash.]

Toronto -- Nortel Networks Corporation announced that its principal operating subsidiary Nortel Networks Limited (NNL), and certain of its other subsidiaries, including Nortel Networks Inc., Nortel Networks UK Limited (in administration), and Nortel Networks SA (NNSA) have concluded a successful auction of substantially all of the global assets of Nortel's GSM/GSM-R business. Telefonaktiebolaget LM Ericsson ("Ericsson") and Kapsch CarrierCom AG ("Kapsch") are the winning joint bidders with a purchase price of US$103 million in cash.

The sale is subject to court approvals in the U.S. and Canada, which Nortel will seek at a joint hearing on December 2, 2009, and at a later date in France. The sale is also subject to certain regulatory approvals, information and consultation with employee representatives and/or employees in certain EMEA jurisdictions, other customary closing conditions and certain post-closing purchase price adjustments. Nortel will work diligently with Ericsson and Kapsch towards an expected sale close at the end of the first quarter of 2010, subject to the timing of obtaining regulatory approvals.

If approved by the courts, Ericsson will purchase assets relating to the North American GSM business and Kapsch will purchase assets relating to the EMEA and Taiwan GSM businesses. Kapsch will also purchase the assets of the GSM-R business. Nortel has more than 15 years experience with this technology and is the number one GSM-R provider globally.

Each bidder will assume the relevant customer contracts in their specified regions as well as the products, specified patents predominantly used in the GSM/GSM-R business and non-exclusive licenses of other relevant patents.

Approximately 680 Nortel employees will receive offers of employment from the joint bidders. This includes those employees assigned to the GSM/GSM-R business in certain EMEA jurisdictions who will transfer automatically to Kapsch by operation of law.

"This is a major step forward for our business. These acquistions will enable our customers to continue to benefit from the product innovation and support that they've come to expect from us," said Graham Richardson, GM for the GSM/GSM-R business, Nortel. "Today's announcement is also a turning point for our employees, the majority of whom will take their considerable expertise on to Ericsson and Kapsch."

"The transaction emphasizes Ericsson's commitment to the North American market and strengthens our position as the leading provider of telecommunictions technology and services in the United States and Canada" said Hans Vestberg, incoming President and CEO of Ericsson.

"We have worked closely with Nortel on the GSM/GSM-R business for over 20 years. This acquisition transforms Kapsch from a regional player to the market leader in GSM-R," said Thomas Schopf, Chief Operatintg Officer of Kapsch.

GSM (Global System for Mobile communications) is the most popular wireless technology standard for mobile phones in the world. Nortel is a leading supplier of GSM networks and has worked with operators worldwide on implementing the GSM family of access technologies including GSM/GPRS/EDGE. Also based on GSM technology is GSM-R (GSM for Railways) which provides a secure communications system for railways operators.

As previously announced, Nortel does not expect that the Company's common shareholders or the NNL preferred shareholders will receive any value from the creditor protection proceedings and expects that the proceedings will result in the cancellation of these equity interests.

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