(RTTNews) -  LM Ericsson Telephone Co. (ERIC: News ) Wednesday said it was selected as a successful bidder to buy certain assets of GSM/GSM-R business of Canadian network solutions company Nortel Networks Corp. (NRTLQ.PK: News ) in the US and Canada, for a purchase price of US$70 million on a cash and debt free basis, subject to adjustments.

Ericsson said the announcement followed the completion of the auction process initiated by Nortel, which has been operating under bankruptcy protection. Ericsson's bid for Nortel's GSM assets was made together with Austrian telecommunications company Kapsch CarrierCom AG.

Under the deal, Ericsson will acquire an installed GSM base, which will expand its North American business, while Kapsch will pay US$33 million to buy most of the remaining assets outside North America.

The agreement also includes transfer of important GSM business with North American operators such as AT&T and T-Mobile. As per the agreement, Ericsson will offer employment to about 350 employees from Nortel.

Hans Vestberg, incoming president and chief executive officer of Ericsson, said, "Along with our recent acquisition of Nortel's CDMA and LTE assets, the transaction emphasizes Ericsson's commitment to the North American market and strengthens our position as a leading provider of telecommunications technology and services in the United States and Canada."

On November 13, Ericsson completed the acquisition of Nortel's CDMA Business and LTE Access assets for US$1.13 billion. Ericsson noted that, together with this acquisition, the GSM acquisition will make North America the largest geographical segment within the company, including about 14,500 employees, up from 5,000 at the beginning of 2009.
Ericsson added that the acquired operations will contribute top- and bottom-line additions to Ericsson, which is expected to have a positive effect on Ericsson's earnings within a year after closing.

Nortel's North American GSM operations generated approximately US$400 million, while Ericsson's North American business generated US$2.7 billion of sales last year mainly from GSM and WCDMA equipment and associated services.

Nortel had planned to sell the division last week, following its filing for bankruptcy protection in January.

In its release, Nortel confirmed that it has completed an auction of substantially all of the global assets of its GSM/GSM-R business to Ericsson and Kapsch for a purchase price of US$103 million in cash.

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