Nortel Puts GSM Business on the Block

By Mark Evans | Published: October 1, 2009

Nortel is selling its GSM business – an asset that many people may have not been aware that Nortel even operated given its low profile.

Nortel said it will hold an “open auction” to sell “substanially all of its globa GSM/GSM-R business”. Qualified bidders need to submit offers by Nov. 5, while the auction will be held Nov. 9.

“The proposed sale process will provide a timeline for identifying the successful bidder for our valuable GSM/GSM-R assets,” said Pavi Binning, who is now Nortel’s Chief Restructuring Officer. “The process is expected to result in a formal agreement with a buyer. We have seen interest in this business during extensive initial discussions.”

Potential buyers of the GSM business includes Ericsson, Huawei, Nokia-Siemens, ZTE and Alcatel-Lucent.

Note: Here’s the Nortel press release about the proposed GSM sale.

[Slashdot] [Digg] [Reddit] [del.icio.us] [Facebook] [Technorati] [Google] [StumbleUpon]
This entry was posted in M&A and tagged , , , , . Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.
Newer Comments →
  • betoX

    Probably none of the mentioned suppliers will be interested in buying it.
    Darryl Edwards President Worldwide Sales and maximum responsible in Europe (but he just left Nortel, yesterday!) was favourable to sell it to Kapsch of Austria, but the French (Nortel base for GSM/GSM-R) are pushing for Thales.
    This auction will include GSM-R, specific GSM for the Railways. Nortel is number 1 supplier with 65% market share, the second is NSN, and Huawei has been aggressive trying to enter this market.

  • KayToo

    I wish they would keep the GSM. Wireless is hot yes? Keep the LTE patents as well and sell everything else. A Nortel could still emerge with a clean slate stationed in it's humbler quarters in Mississauga. The creditors may finally have been fed enough to look up and see some other possibilities.

  • felixmk

    Can I get what you are smoking?

  • gone2moro

    Interesting that they would do this now. One would think that they wouldn't take this approach with out have had some interest in the assests. Is there interest? It's such a non-entity who would care? Would seem like more trouble than its worth.

    If there is no real interest is this the first instance of a real liquidation?

    Is there a valuation on the assets or will they take what ever they can get?

    Maybe they throw in a Shamwow and a tub of OxyClean with it….

  • justwonderingaboutgps

    Take me to your Leader.

  • felixmk

    The important parts of this business are the AT&T core network, GSM-R, and uhhhh..that's it.

  • TongueInCheek

    We should expect all operating units with R&D, Sales & Support to be sold through various auctions over the coming months. It is possible that the Patent Portfolio will be retained under a Nortel brand depending on what the various Creditor Committees and the Monitor decide is the most appropriate actions to maximize value back to the Creditors.

    Value to the Creditors is a legally binding responsibility in bankruptcy cases.

  • Byebye

    They have 90% of Bouygues Telecom GERAN and half of Orange France, they also have 30% of TMO USA GERAN and some big operators in India, Taiwan and some provinces of China

  • Byebye

    I would say if I was ZTE with very little presence in US and Europe, I would buy it for a bargain. For Ericsson or NSN I agree that the interest is lower.

  • ntpurgatory

    Any bets on which division announces after this? CVAS or MEN?

    My guess is CVAS annouces late in Oct with MEN slipping into winter…

    Any bets on a division just having to liquidate with no buyer?

  • yes4aapl

    Value to the Creditors is a legally binding responsibility in bankruptcy cases.
    ===
    re
    Is it your opinion in that case?
    In my opinion Nortel is been using Ch11, in other words
    Nortel is been protected from creditors.
    What's Ch11?

  • vestedinterest

    I say MEN goes a little sooner than you think.

  • Lookahead

    I don't think MEM is going any sooner as Nortel could hold it until the market getting bit of hot and the creditors like the idea.

  • legume

    J'ai oui dire que le MEN s'en est alle

  • felixmk

    Yes they do have these past sales but there is not a lot of future revenue from this base. No one is going to buy more Nortel GSM kit to expand their GERAN unless they have to. So, as a buyer, you will get few benefits from past GERAN sales. Plus the UMTS migration is now in full swing in France, China, USA. On the other hand, the GSM-R alternatives are few so this past business may lead to future business. The AT&T core may give a buyer a chance to migrate this core to their own platforms.

  • wasthere

    Looks like MEN and VOIP business sale are postponed because of the tax men ! Unfortunately these IRS jackals have all interest to delay the dismantling; they can wait years in order to have this issue solved but not the creditors !

    http://www.ottawacitizen.com/news/claim+taxing+…

  • scalppeeler

    Don't blame the americans only. Not just the taxman at fault here.
    The Canadian Government as usual is also to blame for shooting down
    and abandoning one of their own homegrown talents.
    Not only did they not help out nortel in their hour of need they are SUING for money also. The dumb canuckois gov't put in a claim. No doubt Mcguinea, harpo, jim watson, flaherty, jim baird, gord oconnor, john manley and tony clement all put in personal claims.

    “If that is not enough to worry about, the Canadian government has also filed a claim in the U.S bankruptcy court. The receiver-general of Canada made no specific dollar claims”

  • felixmk

    MEN is worth less than everyone thinks. You have to take Phil Morin with the business.

  • wasthere

    In fact any tax men is to blame(CDN or US). If they add claims why do they suddenly show up 10 years after the facts and especially when there are thousands of creditors(law off employees, retiree's)
    waiting in line trying to get a peace of what this company owes them ! I just don't find that very ethical. The tax men should instead get a hold of the tons of rich people that are using all kinds of tax evasion tactics and pay 0 income tax.Yeah but of course this would be hard work !!!

  • protosphere

    What GSM business? Nortel isn't exactly renown for its GSM.
    What does $500M in sales a year earn? What's it worth?

  • protosphere

    “It is possible that the Patent Portfolio will be retained”
    (I disagree.)

    “under a Nortel brand”
    (Stop it, my ribs hurt, yer killin me here)

  • protosphere

    I am not sure where you guys are going with this but the governments and regulating authorities have bent over backwards appeasing this incompetent bonus happy management after one of the the largest fraud settlements on earth.

    How can you blame anyone but Nortel. Than everyone and anyone but Nortel.

  • protosphere

    Nortel's press release is false and misleading:
    “Nortel is a leading supplier of GSM networks “
    Can't even say it ever was.

    “Also based on GSM technology is GSM-R (GSM for Railways) “
    Ya, cornering the thirld world railways markets, hahahaha… too funny… good one, the punch lines never cease with these madhatters.

    “Nortel GSM portfolio up to 50% more energy efficient than it was five years ago.”
    Like Cisco Energy Tax?
    What a riot!
    Their PR is getting as hysterical as when they were operating as a going concern.

    They always did have some one's interests to champion. Yesterday the employee and shareholders, today the creditors as the tax man throws a turd into their punchbowl.

    Koolaid, new bonuses, no severances, new raises, trade options one more time for the road…, departures, etc., same old Nortel to the bitter end. New puppets same old strings masters…

  • GoProto

    This is not a time line like you think. They didn't Start looking into this 10 years ago and just keep Mum. They started looking into it and wound up going back 10 years to the origin of whatever they think is a problem. Nortel doesn't exactly have the best track record for reporting accurate numbers that comply with the rules of what is allowed legally by a Corporation, and remember more then once they re-stated numbers. A BIG red flag on top of CH11, which IRS would check tax reporting for in every case. IRS is not the villain here. I hope their case has no merit, but don't be surprised if it does.

  • GoProto

    “In my opinion Nortel is been using Ch11, in other words”
    ==============

    Yet another example of extending NT Fraud. Who doubts they had nothing but CH 7= Liquidation in mind as soon as the bogus “Gov't Hearing” Z sweated through was over, if not before? The entire aim was to keep the chains moving down the field inches at a time, and NOT get a First Down so Bonuses and BoD raises could be collected even as they manuvered to not re-structure, not get the best return for shareholders, not pay employees severance, but keep lining their pockets. A Sham, Through and Through.

  • GoProto

    Don't Go Into The Light!!!

  • GoProto

    Any News on the Enterprise “Federal hearing”, uh-hem, I ask, with a semi-straight face?? Did Avaya get Struck Down??? Is Enterprise going to an alternate bidder?

  • bankrupt_bob

    Musings:
    <<Stockholders – owners of the company, have the last claim on assets and may not receive anything if the Secured and Unsecured Creditors' claims are not fully repaid. >>
    http://www.sec.gov/investor/pubs/bankrupt.htm

    If stockholders own the company, why don't they have a voice?

  • wasthere

    Just on question :When Nortel was doing all kinds of re-statements in 2004-2005-2006 and had to get all kinds of approvals from different authorities before they publish their numbers, where was the tax men ! Why they didn't oppose then ? They look to me like hot shots that just slides in front of everybody(creditors) in line at the last minute.
    Anyway, I would like to know how a company not making any profit in the last 10 years can owe them 3 billions ? Sounds weird !

  • GoProto

    …”had to get all kinds of approvals from different authorities”
    ——————————–
    Nortel seems to be able to do whatever it wants with no one questioning or stopping them. i.e. parading around as if you are in CH11 when by all actions, you are liquidating (CH7). Validity ever challenged? Nope. Cutting severances only to pay out $45 mil in bonuses while under BK protection. Trying to circumvent Labour Laws in Europe. Forecasting profits only to nose dive and tank.. Conflicts of interest on BoD. And so on.

  • yes4aapl

    Nortel saga will never end.
    Let's summarize all the current facts
    Nortel is liquidating all assets using Ch11 protection laws.
    The creditors line is growing.
    Taxman jumped in front with $3 bill claim.
    Pension Fund claimed around $4 bill
    Bondholders claimed $4 bill with MattPatt as the biggest with $0.4 bill
    Employees…
    LTD employees…
    suppliers…
    The name of the game now is
    Monetize all assets!
    and after that
    Fight strong to grab whatever is left! whatever you can get!

    There could be as much as $5 bill to share.

  • zeroman

    if that is all they can write about their portfolio to market it, then buyer beware.

  • zeroman

    and that means all his buddies. ouch.

  • yes4aapl

    GP /whoever u r/
    It took me a while to figure it out but now I know /it's my best guess/ that Nortel used Ch11 to cover up the last frauds like
    -Growing up single digit claim in 2008
    or
    -Margins have been improving claims
    ….
    There are 3 class actions pending
    and Taxman jumped in with $3 bill claim
    next we should see SEC action to expose BK's reasons.
    http://www.allaboutnortel.com/2009/05/26/anothe…

  • GoProto

    Agreed. There was definitely intent to cover something up. This was not just a case of a Company trying to salvage itself and get re-organized. Look at their actions, none of them support CH11. It's just an empty, albeit deceitful label used as a cover-up. I can't wait for SEC to get their arms wrapped around this one..

  • scoop1985

    Stockholders do have a voice through the Board of Directors and through the Shareholder's Meetings. As owners, they are obligated to pay their debts. If they felt that the management was irresponsible in managing the business, their actions would be taken through the BoD. However, if the BoD and management are one in the same (at least action-wise), then shareholders are screwed. If you cannot pay your debts, you seek protection from your debtors via the bankruptcy court. This essentially wipes out most all shareholder equity.

    BTW, the shareholder equity for Nortel has been negative since 2000 or so. So, one can argue that buy-and-hold shareholders were screwed a long time ago.

  • NortelTragedy

    I'd like to see a thread about this … what are the FRAUD allegations? Is it believed that there will be ELT/BoD jail time?

  • protosphere

    It is the sheeple infliction syndrome complacent North Americans fall victim to in having trust in those that represent them.

    From doubling the price of a 17 cent stamp years ago, allowing GST, legalizing casino gambling, increased taxes, shrinking social progeams, even striking for severances in a harsh economy, etc.

    The shareholders could not vote in management or influenced their pay practices any easier voting for them to return the fraud bonuses. Nortel encouraged shareholders to vote on keeping in a kangaroo AGM should this vote have soured.

    United we stand divided we fall in full bloom… Shareholders fell… Shareholders should have not have failed to negotiate pay practices either and indeed voted on these positions they called “hard to fill” for some strange reason.

    Perhaps shareholders would have had more trust in the Garys too! Perhaps shareholders would have run this company better than their inexperienced management by insisting on a managemnt with a track record in telecom with real performance based incentives than buying losing revenues to reward themselves on cutting costs or financial innovation. An an honest management that wouldn't harlet principle for their culture's cause let alone have one of their board member's law firms defend a past CEO accused of fraud on both sides of the border while suing this board member's company for wrongful dismissal.

    Lots stinks at Nortel, right into its dying day where they loot the corpse with no shareholder approval needed as they diluted hundreds of millions earlier, again, to pay themselves.

  • protosphere

    It is one thing to share in the burden of volatility in market conditions, and another in being led totally astray with intent. That is to lie for theft / AKA-criminal fraud.

    Shareholders got screwed in not only the largest fraud in Canada (they paid with their own shares as they voted to keep fraud bonuses then printed more company money to pay the fallout) but by further negotiating in ultimatum (fewer heads that held most shares also got to call it, legally. Another law in bias to big players that needs review in my opinion, one they failed to directly address to a plaintiff contesting the ultimatum settlement =).

    Like who negotiates with terrorists to harlot principle let alone facilitate enormous liberties for the sake of minimizing further damage. We see its results. They shot the hostages anyways after claiming to briefly feed them. =)

    TSX from $800 to 18 cents a share with $20 buying opportunities, largest asset on books was a tax write-off, made bad news hard to find and hyped under safe harbor extending repair of internal controls for half a decade until “friends”, as insider ex CFO Currie would say, at SEC stepped in years later, all the reiterated 3 to 5 year turnaround plans, with their largest pension shortfall in Canada further tanked in equities, one they listed as a mere footnote in bond applications before loophole was closed, rewarding financial innovation, etc, it was soooo endless…instant idiots, just add bonuses…a corrupt and incompetent management team created the perfect storm, delisted, disgraced, bankrupt, and liquidating as fast as they can.

    Shareholders… zero, nadda, squat, zip… Why? Because Nortel lies.

    Business 101, the company lies, the company dies, end of story. The days of do it but don't get caught are over, we have a new Sheriffs in town, and those seeking less regulation or lax laws should hopefully be S.O.L. in the not too distant future as the Harpers and Obama's take control amid an opposition of tyranny. =)

    …just my narrow view, subject to enlightenment =)

  • protosphere

    “Monetize all assets!”

    “all” assets …Exactly!

    Precisely what they are doing as fast as they can, while they can.

    They had to liquidate all even before assets depreciated by the day and new creditors surfaced by the day.

    TongeInCheeks does not know how assets apply to bankruptcy. No assets can be exempt

    Some one should explain to Tics that they can not keep assets with such a grave shortfall as they scramble to unload them before they are burned and buried.

    I think TiC is hoping the Nortel brand will somehow survive to defy these physics… he is a funny speculator over the years refusing to accept any of the exhaustive substantiation. I wonder why he presses so hard in relentless denial. GSM, patents, LG, MENS, Enterprise, CDMA/LTE, anything and everything is for sale… please, please take it, make liberal judge Gross gleeful as he supposedly tries to appease big business creditors but the IRS wants nothing to do with him.

    Endless punchlines right into the close. Nortel was already extended enough liberties, let alone bonuses, and now raise for the remaining board members as the monitor overlooks looting the corpse.

  • protosphere

    “next we should see SEC action”

    with plenty of new subpoena's and the Department of Justice all ears as they had done with Enron…

    this level of mass orchestration into restating restated restatement under safe harbor deserves forced inquiry into who was so difficult to find and so few fall guys, like a handful more immediately folloing RCMP probe announcement… too fishy

  • protosphere

    Teflon old dream team board plea bargained, timely resigned, and got 3 years to pay back their ill got bonuses they approved while denying anyone could see obvious red flags.

    New green team not at the crime scene was worse to maintained old culture on steroids, with so many termed “difficult to find”, still there… as fraud trials loom on both sides of the border.

    Lucky Dunn is tried criminally in Canada. In the U.S. he would face quarter century sentences like Skilling and Ebbers, and I do not know whether they can extradite after being criminally charged here, on jurisdictional grounds perhaps =)

    Some even comment fraud will be difficult to prove. I agree unless it is the DOJ asking the questions =)

  • layoffsatnortel

    I heard from a few friends there layoffs going on right now ? Who all are impacted ? Which groups are next ? When is the next round ?

  • justwonderingaboutgps

    Why not ask your *few* friends :) and then post the results.

  • GoProto

    ” If they felt that the management was irresponsible in managing the business, their actions would be taken through the BoD. “
    ——————————————
    Really ? How was this BoD acting responsibly by leaving Z at the helm while tanking while publicy forecasting optimistic returns? A GEnius who somehow found it prudent to talk up buying shares at $20? They dropped the ball, and that's putting it mildly.

  • GoProto

    GP /whoever u r/
    —————————-
    yes4 ~

    I double up as a janitor and a light bulb changer in big office complexes …

  • scoop1985

    Kinda missed my point about the BoD and management acting like one-and-the-same. Like it or not, the shareholders representation is the BoD which IS elected by shareholders. I am not arguing that the BoD acted responsibly. In fact, they failed in every respect in representing the shareholders interest. Period. As in US politics, if you don't cast your vote, then don't cry foul. A very high percentage of people never attended the AGM and never tendered a proxy vote. If you didn't like the BoD or management, you should have dumped a long time ago.

  • exnortel10000

    I was laid off last week, and I was from MEN… toghether with a few guys from GSM and CDMA and Enterprise.

  • yes4aapl

    I double up as a janitor
    ===
    re
    You r one of the most intelligent janitors man.

  • GoProto

    Thank you yes4..

    ~ GP

Newer Comments →
  • TwitterCounter for @markevans
  • Seeking Alpha Certified