Swedish network equipment vendor Ericsson has agreed to purchase Nortel’s stake in LG-Nortel for $242m on a cash and debt free basis, in a move to strengthen its ability to serve the Korean market and reach new customers.
Hans Vestberg, president and CEO at Ericsson, said: “Korea is one of the largest telecom markets with advanced end-user demand of new services. A strengthening of our position through the collaboration with our new partner LG Electronics will enhance our position for future technology shifts such as LTE.”
Nortel has majority shareholding (50%+1 share) in LG-Nortel, , a joint venture of LG Electronics and Nortel Networks. The joint venture, which is to be renamed LG-Ericsson, has contracts with Korean operators such as KT, LG Telecom and SK Telecom.
Ericsson said that the acquisition will provide it with an established sales channel and strong R&D capability in the country in addition to an industrial base and the ability to build new customer relationships.
The joint venture, which was established in 2005 through the contribution by LG Electronics of its telecommunications systems business and by Nortel of its Korean distribution business, will continue to be headquartered in Seoul, Republic of Korea.
Jae Ryung Lee, CEO at LG-Nortel, said: “LG-Ericsson is expected to provide the Korean market with leading technology and customer supports in cooperation with Ericsson’s Global Leadership in Telecommunication market. We are excited by the new perspective for our company.”
