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UPDATE 2-Ericsson says bids for Nortel wireless assets

Published 07/23/2009, 11:55 AM
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* Offer competes with Nokia Siemens Networks

* Auction set for Friday

(Adds analyst comment)

By Sven Nordenstam

STOCKHOLM, July 23 (Reuters) - Swedish telecom equipment maker Ericsson said on Thursday it is bidding for bankrupt Nortel's mobile network unit in a race pitting it against smaller rival Nokia Siemens Network.

"We always look at opportunities that can be of interest for Ericsson and create value for us, and we are participating in this process to the point it makes sense," said Ase Lindskog, spokeswoman at Ericsson.

Canada's The Globe and Mail reported earlier on Thursday Ericsson had submitted a bid worth $730 million. Lindskog declined to comment on that figure.

Preliminary offers to compete with a $650 million "stalking horse" bid from Nokia Siemens Networks for Nortel's CDMA and LTE wireless technology businesses were due on Tuesday, and the auction is set for Friday, July 24.

Richard Windsor, global technology specialist at Nomura, said the bid value reported by The Globe and Mail would make Nortel's CDMA assets a handsome investment from a financial point of view for Ericsson.

"If you look at it financially, you could say 'that's a good use of cash', and that's how I think they're looking at it, and that's how I think Nokia Siemens is looking at it," he said.

A price tag above $800 million was likely to make the deal less enticing in the eyes of Ericsson, he said, adding the Swedish company would have little use for Nortel's assets in high-speed mobile network technology LTE.

"It has already won the LTE contract with Verizon which should be as good a reference for Sprint as any, and they've got the big services deal with Sprint, so they're going to be at the table when Sprint makes its LTE decisions. I don't think they need it," he said.

Earlier this month Ericsson won an outosurcing deal with Sprint to manage the operator's CDMA-based network worth $4.5-5 billion over seven years.

A Nokia Siemens Networks spokesman said the firm would not comment on other bidders in the auction, and that it "looked forward to concluding the process with a successful outcome".

Canada's Research In Motion Ltd, which makes BlackBerrys, said on Monday that Nortel had effectively blocked it from bidding potentially $1.1 billion for the Nortel's wireless business.

Nortel said in a statement late on Wednesday the auction would go ahead as planned, despite the objections from Research in Motion. Nortel said RIM was blocked from the auction because it refused to comply with procedural requirements.

(Reporting by Sven Nordenstam; additional reporting by Ajay Kamalakaran in Bangalore and Brett Young in Helsinki; editing by John Stonestreet)

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