It’s sad to see a once proud company crumbling slowly, but it has turned out very nicely for Ericsson. What am I talking about? Canadian company, Nortel. The massive telecoms equipment maker filed for bankruptcy last year, and has been selling off bits of itself in order to fulfill its debt obligations. And today Ericsson has announced that it has finally managed to break into the Korean market – by buying out Nortel’s interests there.
What’s the story?
Ericsson caused quite a bit of upset last year when it successfully bought LTE patents and technology from Nortel. It is continuing to benefit massively from the collapse of Nortel in Korea. Nortel was part of a joint-venture in Korea called Nortel-LG, with (you guessed it) mobile phone maker LG.
Ericsson has bought that out for US$242 million – so now Ericsson has the foothold in Korea that it has wanted for so long.
What we think?
This deal is really about two things for Ericsson: an even bigger LTE presence, and more of a footprint in Asia. It’s positioning itself very well for the coming rollout of LTE world-wide. As Motorola and Clearwire focus on WiMAX, and Alcatel-Lucent is working on Next Generation Networks, Ericsson seems to be the network builder that is most focused on LTE.