Nortel wireless sale approved by courts

Courts in Ontario and the U.S. approved the sale of Nortel Network's wireless technology division to Sweden's LM Ericsson on Tuesday.

Ericsson, a heavyweight in the global wireless sector, won the Nortel unit over the weekend when it bid $1.13 billion US for the operation.

The sale needed court approval because Nortel is operating in court-supervised bankruptcy protection in Canada and the U.S. The hearing Tuesday was  a joint session involving a video link between courts in Toronto and Wilmington, Del.

U.S. Judge Kevin Gross said he was satisfied that the price was fair.

While Ericsson was confident the court would approve the sale, some politicians have called on the government to hold up the sale on the grounds that Nortel's advanced telecommunications technology will wind up in foreign hands.

"There's no shortage of capital in Canada that could be invested in securing Nortel as a Canadian business and keeping it Canadian," NDP Leader Jack Layton told reporters in Toronto.

"We’re not taking a view at this point at all on which particular investor would be the most appropriate, but we do know one thing and that is that Nortel represents some of the best intellectual innovative work done by Canadians over many decades, and that's an asset that we can’t afford to lose," he said.

However, Nortel lawyer Derrick Tay told the hearing that Nortel's long-term evolution patents — the next generation of cellphone technology — were not sold to Ericsson, but rather licensed to the company.    

Ontario Finance Minister Dwight Duncan called on the federal government to block the sale, while federal Opposition Leader Michael Ignatieff called for a review of it.

Clement weighs next move

Federal Industry Minister Tony Clement said the federal government will wait for the bankruptcy courts to deal with the issue before making any moves. He said it would be premature to intervene at the current stage.

"What I am saying, we are obviously reviewing the bid, and we will have more to say once that review is done," he told reporters in Ottawa.

Waterloo, Ont.'s Research in Motion, the maker of the BlackBerry, complained that it was barred from bidding for the Nortel assets. Nortel said RIM refused to agree to court-sanctioned terms for the auction Ericsson won.

RIM has also urged the federal government to take a stand against the sale.

Technology analyst Duncan Stewart believes the federal government will quash the sale to Ericsson.

"I think the odds are that the federal government is going to veto this transaction, and RIM is going to have to pay more than Ericsson, but I think RIM is going to end up with these assets at the end of the day," he said.

Parallels with Radarsat-2 sale

Another technology expert, Carmi Levy, sees parallels between the Nortel situation and the proposed $1.3-billion sale of the space-technology division of Vancouver-based MacDonald, Dettwiler and Associates to a U.S. space and weapons company.

In spring 2008, the federal government took an unprecedented step and blocked the MDA sale. Former industry minister Jim Prentice said at the time, he was not satisfied that the sale would be a net benefit for Canada.

Prentice said that issues of Canada's sovereignty were a major factor in the decision to block the sale of Radarsat-2 technology.

Radarsat-2 launched in December 2007 and was hailed by government, space and military officials as a tool to protect Canada's sovereignty over the Arctic. The satellite is capable of peering through cloud cover and darkness to detect objects at resolutions of up to three metres. The federal government contributed $430 million to the Radarsat-2 project through the Canadian Space Agency.

Speaking of Nortel, Levy said that anyone "who get a hold of [the advanced wireless technology] is giving itself a very big leg up in terms of leapfrogging everyone else in the race to the next big thing in wireless."