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Ericsson looks for government help with Nortel

Executives from the Swedish telecom equipment maker could not say how many Nortel CDMA or LTE employees will stay on in Canada with Ericsson

LM Ericsson of Sweden, which is working on Long Term Evolution (LTE) products in Montreal, plans to approach Export Development Canada asking for help in buying the carrier wireless assets of Nortel Networks Corp. Ericsson was the highest bidder, offering US$1.13 billion, in an auction that wrapped up early Saturday.

Toronto-based Nortel, which has been operating under bankruptcy protection since Jan. 14, has been trying to sell most of its assets for months.

The assets Ericsson will gain are the code division multiple access (CDMA) products, plus the contracts to sell those products to North American carriers. It will also inherit Nortel’s LTE technologies.

“Nortel is a great company with great products and skills and people,” said Carl-Henric Svanberg, Ericsson’s president and chief executive officer, adding the Nortel went bankrupt for “reasons other than that.”

Svanberg made his comment during a teleconference Monday with reporters and investment analysts.

Hans Vestberg, Ericsson’s chief financial officer, said the company has “no plans to consolidate” its 18-year-old Montreal facility with Nortel’s Ottawa research centre.

But he could not say how many Nortel employees will get transferred over to Ericsson in Canada. Ericsson is only saying it plans to hire 2,500 Nortel employees, 400 of whom would work on LTE.

“This is an increase in our investment in LTE,” Vestberg said.

Ericsson will not be acquiring all of Nortel’s LTE patents. It will pay licensing fees for some and will become the owners of others.

The same would have been true for Nokia had it won the auction.