Summary
NSN was left out of the LTE deal of Verizon Wireless. By the acquisition of Nortel's CDMA assets, NSN has assured itself of substantial footprint for LTE in that carrier. Sprint-Nextel is also going to be the next battle ground if and when that mobile carrier can get itself organized and start spending capital. There will be some residual benefit for NSN in China, the next largest CDMA market in the World where Nortel had substantial footprint.
Analysis
It has been widely speculated that NSN will be buying some portion of Nortel's valuable assets to get some footprint in the US LTE market. NSN has not had a major announcement for LTE anywhere. Ericsson, Alcatel-Lucent, and Huawei have been the winner of the LTE awards lately. Now, with the acquisition of Nortel's CDMA asset, NSN has a definite advantage in both Verizon Wireless and Sprint-Nextel to get some LTE footprint.
It has also been rumored that the price of getting into the Verizon Wireless' network for NSN has been through the acquisition and maintenance of the CDMA gear. Based on some of the prevailing testing of LTE, it seems that Nortel's LTE radio was superior to NSN's, despite financial difficulties that Nortel has had. Also, from time-to-market, Nortel has been much more ahead of NSN and this acquisition could give a boost to NSN's plans to penetrate the LTE market.
This deal definitely impacts ALU and Ericsson negatively in the US market where they were having a good time at Nortel's expense, winning footprint and new business at Nortel's expense.
Export Development Canada, Canada's government-owned export credit agency, is supporting the deal with a $300 million loan commitment as well which should help NSN to migrate Telus and Bell Canada's CDMA network to LTE as it phases in their 3G/UMTS radio.
There will be some residual benefit for NSN in China, the next largest CDMA market in the World where Nortel had substantial footprint.
The main question still remains to be the ability of NSN to execute the merger. It is still having some difficulties with the integration of Siemens assets into the Nokia's processes. Hopefully, this will not be another boat anchor around NSN's ankle!
