Light Reading
Swedish vendor makes the case for spending $1.13 billion on Nortel's wireless assets

Ericsson: Why We Want Nortel's Wireless

Michelle Donegan
LR Mobile News Analysis
Michelle Donegan
7/27/2009
50%
50%

Ericsson today stated the rationale for its $1.13 billion bid for Nortel's North American CDMA business and Long Term Evolution (LTE) assets. (See Ericsson Delivers Knockout Blow to NSN.)

On the day before the joint hearing of the U.S. Bankruptcy Court and Ontario Superior Court of Justice that is scheduled to approve the winning bid for Nortel's wireless assets, CFO and soon-to-be CEO Hans Vestberg expressed confidence in his company's bid and spelled out why the acquisition makes sense to the Swedish vendor. (See Nortel Auction: NSN Bid $1B+.)

Vestberg said the $1.13 billion price tag for Nortel's wireless assets was "relevant and correct and good."

So, what's in it for Ericsson?

In a nutshell, for just over $1 billion, the Swedish vendor gains a cash-generating and profitable (albeit declining) CDMA business, a CDMA customer base, and a better position to win future LTE deals from operators looking to migrate from CDMA to LTE. (See Nortel Wireless Winner: It's Ericsson! and Ericsson Wins Nortel Wireless Auction.)

CDMA business
Even though Vestberg noted the CDMA business was in "gradual" decline, he said the business would generate an operating margin of more than 10 percent this year. Nortel's CDMA business generated revenues of about $2 billion in 2008 and is on track to deliver $1.3 billion in revenues this year. (See Services Save Ericsson in Q2.)

One explanation for being able to achieve this year what Vestberg described as a "robust, double-digit" operating margin is that the 2,100 employees attached to the CDMA business as part of the deal have already been downsized "quite considerably."

"The number of employees is lower than [Nortel] is actually running with," said Vestberg, adding that he did not see the need for redundancies after the deal closes. "The business we're taking over has the relevant resources needed."

Vestberg said he believes the North American CDMA operators will continue to invest in infrastructure for two more years -- after that the business will be primarily maintenance work.

"Even [with] declining growth, it's a good, profitable business. It has a good product mix, including a significant amount of services."

But Vestberg could not specify exactly how much of Nortel's CDMA business was generated from services.

LTE assets
Ericsson says Nortel's LTE assets, which includes 400 engineers, will add to its own R&D efforts in this area and fill a technology gap it didn't already have -- that is, CDMA-to-LTE migration capabilities -- which it needs to keep its flagship LTE customer, Verizon Wireless , happy.

"The migration of CDMA to LTE -- that's an asset we needed to build up anyhow," said Vestberg. "We'll see these resources work with CDMA migration, while our own LTE R&D [focuses on WCDMA migration]. It's a step-increase on our investment in LTE."

What would Ericsson get exactly?
Vestberg did not spell out in any detail what Ericsson was acquiring in terms of products, nor did he name which of the customer accounts were new to Ericsson.

According to bankruptcy court filings, the CDMA products that are part of the deal are the current versions and versions under development of these products: CDMA base transceiver station (BTS), base station controller (BSC) and enhanced BSC, radio network controller, mobile switching center, home location register, media gateway, gateway controller, billing manager, SS7 signaling gateway software, and associated OAM (operations, administration, and maintenance) software systems.

The LTE products associated with the deal, according to the court documents, are the eNodeB (base station), which includes a universal digital module (UDM) and a universal radio module (URM), and associated element management systems.

— Michelle Donegan, European Editor, Unstrung

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Custom TV
Advantech Accelerates 100G Traffic Handling

10|17|14   |   7:56   |   (0) comments


Paul Stevens from Advantech explains why handling 100GbE needs a whole new platform design approach and how Advantech is addressing the needs of equipment providers and carriers to give them the flexibility and performance they will need for SDN and NFV deployment.
LRTV Huawei Video Resource Center
Holland's Imtech Traffic & Infra Discusses Huawei's ICT Solution and Services

10|16|14   |   4:49   |   (0) comments


Dimitry Theebe is from the business unit at Imtech Traffic & Infra which delivers communications solutions for transportations. His partnershp with Huawei began about a years ago. In this video, Theebe speaks more about this partnership and what he hopes to accomplish with Huawei.
LRTV Huawei Video Resource Center
Huawei's Comprehensive Storage Solutions Vital for SVR

10|16|14   |   6:16   |   (0) comments


SVR Information Technology provides cloud services for academic and special sectors. With Huawei's support, SVR and Yildiz Technical University has established Turkey's largest and most advanced High Performance Computing system. CSO Ismail Cem Aslan talks about what he hopes Huawei's OceanStor storage system will bring for him.
LRTV Huawei Video Resource Center
Mexico's Servitron's Impression of Huawei at CCW 2014

10|16|14   |   6:35   |   (0) comments


Servitron is a network operator in Mexico that has been in the trunking industry for the past 20 years. Its COO, Ing. Ragnar Trillo O., explains at Critical Communications World 2014 that his company has been interested in the long-term evolution of LTE technology and its adoption for TETRA.
LRTV Huawei Video Resource Center
Building a Better Dubai

10|16|14   |   2:06   |   (0) comments


Abdulla Ahmed Al Falasi is the director of commercial affairs, a telecommunications coordinator for the government of Dubai. Their areas of service span across multiple industries, including police, safety, shopping malls and more. In this video, Abdulla talks about his department's work with Huawei.
LRTV Huawei Video Resource Center
Huawei Lights Up Malaysia Partner Maju Nusa

10|16|14   |   1:59   |   (0) comments


Malaysia's Maju Nusa is an enterprise partner to Huawei in networking, route switches and telco equipment. At this year's Critical Communications World in Singapore, CTO Pushpender Singh talks about what Huawei's eLTE solutions mean to his company and for Malaysia.
LRTV Custom TV
Evolving From HFC to FTTH Networks

10|15|14   |   2:19   |   (0) comments


Cisco's Todd McCrum delves into the future of cable's HFC plant, examining how DOCSIS 3.1 and advanced video compression will extend its life and how the IP video transition will usher in GPON and EPON over FTTH.
LRTV Custom TV
Exploring the Future of Cable Access

10|15|14   |   6:23   |   (0) comments


Cisco's Brett Wingo looks at where cable access architectures are heading, discussing the impact of DOCSIS 3.1, CCAP, Remote PHY, SDN, virtualization of cable networks and related technologies.
LRTV Custom TV
Optimizing & Monetizing WiFi

10|15|14   |   5:53   |   (0) comments


Cisco's Vince Pandolfi outlines the reasons for cable WiFi's rapid growth, lays out the issues with the technology and explains the new Cisco tools that can help operators monitor and improve their WiFi delivery.
LRTV Huawei Video Resource Center
Emulex & Huawei Collaboration Mutually Beneficial

10|14|14   |   4:17   |   (0) comments


US company Emulex collaborates with Huawei in areas such as blade servers and workload documentation. Mike Heumann of Emulex believes that Huawei has done incredibly well moving from a telecom company into servers and networks, working closely with customers to realize their needs.
LRTV Huawei Video Resource Center
Chile's VZION Looks Forward to Seeing More of Huawei

10|14|14   |   4:43   |   (0) comments


VZION is a systems integrator company in Chile with a focus on virtulization technology. In this video, Cesar Alcacibar talks about the challenges in virtualization and how Huawei helps his company to achieve the best results possible. Alcacibar is expecting more adoption and integration of Huawei technologies in Chile.
LRTV Huawei Video Resource Center
Pro-Datech & Huawei for a High-Tech Singapore

10|14|14   |   2:59   |   (0) comments


Pro-Datech Systems is a specialty IT solution provider based in Singapore. For an added value to its customers, the company uses Huawei's hardware and trusted performance and features for a total solution. It's looking forward to the creation of a lab, to be based in Singapore, for the two companies' coorporation on total storage solution.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
Hot Topics
Forget the Internet, Brace for Skynet
Stephen Saunders, 10/15/2014
HBO Will Go OTT in 2015
Mari Silbey, Independent Technology Editor, 10/15/2014
Google: Carriers & Cloud Providers Need to Cooperate
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/16/2014
CBS Takes OTT Plunge
Mari Silbey, Independent Technology Editor, 10/16/2014
iPad Air 2 Lets Users Switch Carriers Any Time
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/17/2014
Like Us on Facebook
Twitter Feed