Nokia Siemens Network Purchase of Nortel's LTE and CDMA Assets

Nokia Siemens Network’s purchase of Nortel’s CDMA and LTE assets is a great move for NSN. Prior to this acquisition, NSN was one of few radio access network (RAN) vendors with no CDMA equipment and small presence in North America. North America accounted for less than 6% of the company’s 2008 wireless infrastructure revenue. This transaction will provide NSN instant access to CDMA networks and the North American wireless market.  CDMA is the primary wireless technology in the region with over 52% of mobile subscribers. North America is also the second largest CDMA market accounting for 31.2% percent of all CDMA subscribers according the CDMA Development Group (CDG). Alcatel-Lucent, Nortel, and Motorola are the primary CDMA vendors in this market. NSN will now have instant access to leading North American operators such as Verizon Wireless and Sprint Nextel both of whom operate CDMA networks.  

 

This transaction will improve NSN’s position in LTE since Nortel had several successful LTE demonstrations and was selected by KDDI for LTE core equipment. It will also open the door for NSN to gain access to the potentially lucrative North American LTE market. Verizon Wireless and US Cellular are both Nortel customers and both have plans to launch LTE networks. NSN was selected to provide IMS equipment for Verizon Wireless but lost out on the LTE Radio Access Network (RAN) and Core Network parts of the business to Ericsson, Alcatel-Lucent, and Starent.

The Carrier Networks business unit, which included the CDMA and LTE, contributed over 41% of Nortel’s 2008 revenue which total $10.42 billion USD. CDMA accounted for 21% of this revenue. NSN is gaining business which generate over $2 billion USD per year for $650 million dollars. In addition, the company will gain access to North American operators and future growth opportunities for its LTE infrastructure business. However, NSN will have to execute quickly to limit further defection of Nortel’s CDMA customers to other vendors and stabilize the business. Failure to quickly integrate assets and support customers can erode market share and any advantage gained through this acquisition.