Canada okay for Nortel sale likleyAugust 20th, 2009 - 5:30 pm ICT by IANS
By Gurmukh Singh
Toronto, Aug 20 (IANS) The Canadian government, which is reviewing the sale of Nortel’s wireless business to Swedish telecom major Ericsson after protests by opposition parties and BlackBerry maker Research In Motion (RIM), is almost set to give the go-ahead to the deal.
The 124-year-old Nortel, which has been operating under bankruptcy protection since January, is selling its business part by part to pay off its debtors.
The Toronto-based Canadian icon auctioned it wireless business - featuring the old CMDA and the latest LTE technology - last month to Ericsson for $1.13 billion.
But the BlackBerry maker and opposition leaders pressured the government to stop the deal in national interest as the sale will put sensitive Canadian technology in foreign hands.
Last week, a parliamentary committee sought views of all the players even as the current Conservative government has been reluctant to intervene. Under the Investment Canada Act, a full-scale review of any such deal can be undertaken if the value of the deal exceeded the threshold of $312 million.
But Nortel values the auctioned assets only at $149-million as against the $1.13 billion purchase price offered by Ericsson.
It means the sale cannot be reversed unless the Canadian government cites security concerns, or if it concludes that Nortel grossly undervalued the assets.
Tuesday was the last date for BlackBerry maker and opposition parties to file for a court review of the asset sale, but they didn’t challenge the deal in court.
So the ball is now the government’s court.
Wireless technology experts say both of Nortel’s wireless business technologies - CDMA and the next-generation technology called LTE - were developed in collaboration with many other companies.
They argue that this makes it hard for RIM and opposition parties to argue that the sale of these technologies carry national security interests, a newspaper quoted experts as saying.
Further, Mark Henderson, CEO of Ericsson Canada, has clarified to the Canadian parliamentary committee that his company is only buying wireless technology while Nortel will continue to own the patents.
He says Ericsson has been operating in Canada for decades and has invested millions in innovation here.
Tags: bankruptcy protection, business technologies, canadian icon, canadian technology, cmda, conservative government, generation technology, gurmukh, investment canada act, last date, likley, lte, national security interests, opposition leaders, opposition parties, parliamentary committee, research in motion, swedish telecom, technology experts, wireless business