Ericsson CEO, Carl-Henric Svanberg, says the Nortel business buy-out “reinforces and expands a long-term commitment to North America.”

Swedish telecommunications company, Ericsson, has agreed to acquire parts of Nortel’s North American wireless business for $1.13 billion (£688m).

Ericsson will purchase Nortel’s CDMA and LTE technology. The agreement includes associated contracts with North American operators such as Verizon, Sprint, US Cellular, Bell Canada and Leap, together with LTW assets, patents, and patent licences relating to both technologies.

In 2008, Nortel’s North American CDMA business generated around $2bn of sales, but North America’s biggest manufacturer of telephone equipment filed for bankruptcy protection in January as the global economic downturn took its toll.

The acquisition will substantially increase Ericsson’s presence in the US. Carl-Henric Svanberg, President and CEO of Ericsson, said: “This deal, along with our recently announced Sprint service agreement, truly positions Ericsson as a leading telecoms supplier in North America.”

Nortel President and CEO, Mike Zafirovski, commented on the announcement: “The anticipated sale of our CDMA business and LTE Access assets to Ericsson for $1.13bn represents a very positive prospect for our customers who will be able to continue their relationships with a long term partner; for employees who will have new opportunities at Ericsson and for many of our other stakeholders.”

Richard Lowe, currently President of Carrier Networks at Nortel, has been appointed Chief Operating Officer in the new business and he agreed that Ericsson’s purchase of the business will “provide a strong and stable future for Nortel’s CDMA and LTE business.”

Under the terms of the agreement, a minimum of 2,500 Nortel employees will be offered the chance to continue working at Ericsson. North America will become Ericsson’s largest single region.

The buy-out is still subject to satisfactory approval from regulatory and legal bodies, and court approvals will be sought at a hearing today (28 July).