Ericsson has won the bidding to acquire Nortel's GSM business in the US and Canada, as part of its Carrier Networks division. The purchase is structured as an asset sale at a cash purchase price of US$70 million on a cash and debt free basis, subject to adjustments.

Ericsson's bid for Nortel's GSM assets was made together with Kapsch CarrierCom of Austria. Under the agreements, Ericsson is acquiring certain assets of Nortel's GSM business in North America while Kapsch is paying US$33 million to acquire most of the remaining assets outside North America.

"Along with our recent acquisition of Nortel's CDMA and LTE assets, the transaction emphasizes Ericsson's commitment to the North American market and strengthens our position as a leading provider of telecommunications technology and services in the United States and Canada" said Hans Vestberg, incoming President and CEO of Ericsson. "Our Ericsson family will be once again enriched by the addition of the valuable Nortel employees."

The agreement includes the transfer of important GSM business with North American operators such as AT&T and T-Mobile. Under the agreement Ericsson will offer employment to approximately 350 employees from Nortel. Nortel's North American GSM operations generated approximately US$400 million in 2008.

Ericsson's existing North American business generated US$2.7 billion of sales in 2008, mainly from GSM and WCDMA equipment and associated services. Together with the recently announced acquisition of CDMA and LTE assets as well as the Sprint services agreement, the acquisition makes North America the largest geographical segment within Ericsson and encompasses some 14,500 employees, up from 5,000 at the beginning of 2009.

The transaction is expected to have a positive effect on Ericsson's earnings within a year after closing.

Consummation of the transaction is subject to approval by the United States and Canadian Bankruptcy Courts and the satisfaction of regulatory and other conditions.