Ericsson guarantees 2,500 Nortel jobs

Swedish telecom giant Ericsson will offer jobs to at least 2,500 Nortel Networks employees after winning an auction for the bankrupt Canadian company's wireless unit with a purchase price of $1.13 billion US.

It is likely that about a third of the 2,500 jobs, which make up the bulk of the wireless division's North American workforce, will be in Canada.  

The proposed sale, announced early Saturday morning, means Ericsson will acquire Nortel's so-called CDMA and next-generation Long Term Evolution, or LTE, wireless technologies.

The auction at the New York office of Nortel's lawyers on Friday follows the beleaguered Canadian tech company's slide into bankruptcy protection early this year after the company concluded that its breakup and sale was the best way to deal with its debt.

The bid is subject to court approvals in the U.S. and Canada, as well as the federal government.

In a statement Saturday, Ericsson CEO Carl-Henric Svanberg said the Swedish company "looks forward to integrating Nortel's products and talented employees into our business and realizing the full potential of our combined strengths."

Nortel employs about 25,000 people overall at its wireless, phone equipment and network infrastructure units. About 1,000 people work at the company's Ottawa research and development centre.

The bidding for Nortel's wireless assets started in June, when Nortel said it had a $650 million "stalking horse" offer from Finnish-based Nokia Siemens. That bid established a bottom limit, which subsequent offers would have to beat.

Since then, two other bids surfaced, while Canada's Research in Motion has launched a bitter campaign about the process, claiming it was frozen out and trying to get the federal government to intervene.

Industry Minister Tony Clement initially said he would not interfere, but later said government officials are looking into whether the government might be able to restrict the sale of Nortel assets, Reuters reported Friday.

Finance Minister Jim Flaherty said what the government wants to see "is a level playing field. We don't want to see anyone excluded from the process with respect the sale of the assets of Nortel."

But any decisions about Nortel are up to Clement, he said.

There was also speculation that RIM could team up with one of the bidders that has been admitted to the auction, either before or after a sale is done. And there is always the prospect of a legal challenge to the process.