The Gloves Come Off – Nortel / Ericsson VS The Cdn Govt

by Jeff Wiener on August 6, 2009

42-17771727No, this isn’t about international hockey, but it is about gold – specifically $1.13 billion of Nortel gold.

At first glance, it looks like a typical bankruptcy auction.

Sweden’s Ericsson has swooped in and made the winning bid for what remains of Nortel’s assets. One multinational company buying the carcass of another.

But it’s not really that simple.

Canada’s own telecommunications giant, RIM, is claiming that they were excluded from the auction, which is why they didn’t win. Their justification for not submitting a formal bid was because RIM wanted the long-term evolution (LTE) patents included in the sale of the wireless network. Sure, demanding more in a sale is the Canadian way, but if someone else is willing to take what’s on the table for the price you are asking, you can’t blame the court-approved auctioneers for trying to cash out quickly. Since the offer was almost double what Nokia Siemens Network had offered, this seems like a pretty good deal for Nortel.

But wait, there’s still more to it.
Had this just been a sale of one business to another, this might not be such a big story. The real concern is about the assets being sold to Ericsson; are Canadian tax-payer dollars being taken out of the country, bypassing a local option that would keep the technology, jobs, and tax dollars here in Canada? Or will this sale to Ericsson save Nortel, as well as some of the jobs and money there was invested in the struggling company?

Here is where the politicians get involved.

Ottawa has called an emergency hearing, to investigate the circumstances of the sale to Ericsson. At a time when Canada is actively trying to increase foreign investment, you can bet that this case will be heavily scrutinized by all parties. The opposition party wants to halt the sale (or at least take a really good look at it) claiming that it is possibly harmful to Canada. Some people feel that Nortel has the technical smarts, but lacks the business skills, to be a contender in the future of LTE; while others feel that selling Canadian technology to foreign investors while bypassing local options is unpatriotic.

Expect a lot of finger pointing and excuse making on Friday in the televised coverage of the investigation. The federal government will be grilling RIM as to why they didn’t bid; while the NDP will be focusing on why the current government wants to give away Canadian secrets. This will be must-see Canadian TV.

How many rounds will this one go ? What do you think?

{ 2 trackbacks }

Where Was the Canadian Government?
August 7, 2009 at 7:49 am
Avaya Nortel, Nortel Avaya. Which one is it ? And what happens to your old Nortel equipment ? —
December 29, 2009 at 8:57 am

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