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Transat lant ic Cable
EuroWire – January 2006 22 EuroWire – November 2 09
Telecom
The purchase of Canada’s Nortel
could expand Ericsson’s footprint in
North America by up to 30%
Ericsson AB, of Sweden, the world’s largest maker of wireless
phone networks, seems poised to acquire the wireless
equipment unit of insolvent Nortel Networks Corp, of Canada,
for US$1.13 billion, after beating bids from Finland-based Nokia
Siemens Networks and the private equity firm MatlinPatterson
Global Advisers LLC, of New York. When the outcome of the
auction was announced, on 25th July, reaction in Canada was
swift – and, in some instances, bitter.
Writing in the Toronto Star, business columnist David Olive
asserted that the 114-year-old Canadian company would be
paid a derisory sum for its most valuable business: “about half
what Nortel was expecting the unit to fetch when it filed for
bankruptcy protection in January and began a rapid dismantling
of Canada’s long-time R&D flagship in fire-sale deals with foreign
buyers.” (“Nortel a Sweet Deal for the Swedes,” 26th July)
Crucially, Ericsson is to inherit Nortel’s commanding position in
CDMA, or code division multiple access, the standard of wireless
networks serving over 50% of subscribers in the United States.
Ericsson’s current strength is in GSM, or global system for mobile
communications, the dominant wireless standard outside
North America.
Mr Olive wrote, “As a fading technology destined to disappear
over the next decade, CDMA won’t require lavish R&D spending
by Ericsson. Which means it throws off a lot of cash.” More
important, he added, CDMA is the ideal “platform” from which
the world’s telecoms will migrate to the next-generation wireless
standard, LTE, or long-term evolution, “in which Nortel has a
significant edge.”
The Star’s business columnist consoled himself with the
observation that, because the deal with Nortel was not set
to close until later in 2009, Ericsson did not have a lock on the
prize. There was, he wrote shortly past mid-year, time for Nokia
Siemens to trump Ericsson’s offer or for Waterloo-based Research
in Motion Ltd, the BlackBerry smartphone maker, to launch a
formal bid.
The proposed deal is subject to regulatory and bankruptcy court
approval in Canada, the US, and Europe, but if no other suitors
present themselves, there would appear to be no impediment to
the transaction.
Canadian Prime Minister Stephen Harper has said that it would
be reviewed under the Investment Canada Act to ensure that
it is “in Canada’s national interest,” but he ruled out any other
intervention.
If the deal succeeds it will almost double Stockholm-based
Ericsson’s sales in North America, which would become the
company’s biggest wireless market. Over the next two to five
years, its share of that market could expand by almost 30%;
its global share, by more than 5%.
In brief . . .
The European Union has reasserted its lead over the United ❈ ❈
States in the use of high-speed computer connections,
making the Continent “the world leader in broadband
Internet,” the European Commission said on 4th August.
Europe’s broadband lead over the US narrowed to about one
percentage point after 2004, when countries from Eastern
Europe joined the bloc, according to a spokesman for the
commissioner who oversees the Internet. Martin Selmayr
said the EU has since established a lead of three percentage
points over the US, with 23% of European homes and
businesses using fixed-line broadband as compared with
20% in the United States.
Denmark has 37% equipage with high-speed Internet, the
top percentage in the world, followed by the Netherlands,
Sweden, Finland, and Luxembourg, according to figures
released by the European Commission.
The United States ranks 17th globally – at about the level
of Spain. For her part, Commissioner Viviane Reding has
said that the spread of Internet technology could help
power Europe’s economic recovery, but she called upon EU
member countries to ease the way for new entrants into
telecommunications markets.
A proposal under consideration in Congress would charge ❈
❈
a $10 fee to some visitors to the United States, to help
finance a new US programme to promote tourism. Sharply
critical of the fee idea, the European Union’s ambassador to
Washington, John Bruton, said in a 4th September statement,
“Only in ’Alice in Wonderland’ could a penalty be seen as
promoting the activity on which it is imposed.”
While residents of most European nations had long
been permitted visa-free travel to the US, as of 2009 they
are required to register online at least 72 hours before
travelling and to re-register at two-year intervals. If the new
congressional proposal were signed into law, these visitors
would pay the fee when they register.
A sponsor of the bill, RepWilliam Delahunt, of Massachusetts,
dismissed EU objections to the “nominal fee” that is being
advertised in the US as cost-free to the taxpayer.
The money would go towards a travel promotion campaign
run as a public-private partnership. Among its aims would be
educating foreign visitors on US entry procedures, including
online registration (with a $10 fee) for visa-free travel.
Aviation
Continental Airlines switches over to
Star Alliance. But how much will it help?
Having set a date of 24th October for its withdrawal from the
11-member SkyTeam alliance, Continental Airlines would lose
no time going it alone.