Ericsson scoops last wireless remains of Nortel

It turns out Ericsson’s interest in Nortel wasn’t limited to its CDMA and North American operations. Ericsson (NASDAQ:ERIC) today announced it has purchased one of the remaining pieces of Nortel’s infrastructure: its stake in a joint venture formed with Korean vendor LG Electronics focused on equipment development for the South Korean market.

Nortel and LG formed the venture in 2005 as a means for Nortel to expand its GSM and UMTS business overseas and for LG to get a leg up at home over its arch rival Samsung, as South Korea transitioned from an all-CDMA market to UMTS and high-speed packet access (HSPA). The venture also included all manner of technologies from optical to enterprise, but its primary wins came in wireless. In 2006, LG-Nortel won UMTS contracts with KTF and SK Telecom. The two continued to build on the partnership in 4G, with LG and Nortel conducting joint trials of long term evolution (LTE) gear. However, the nature of the partnership changed and its momentum subsided when Nortel sold off its UMTS business to Alcatel-Lucent (NYSE:ALU).

3G may have been out of the equation, but the venture, which includes all of LG’s telecom systems business, has still been going strong. It generated $650 million in sales last year and employs 1300 people. Ericsson is buying Nortel’s 50% stake and controlling interest in the venture, which will now be called LG-Ericsson for $242 million in cash.

Ericsson officials said that the stake will give it a new sales channel into Korea, which has traditionally been largely closed to outsiders, as well another strong R&D component in Asia. LG-Ericsson will become the second-largest vendor in Korea behind Samsung. As Ericsson bought up both Nortel’s UMTS switching business and CDMA business as well as its LTE assets, it already has many of the infrastructure components that the joint venture sells into Korea, plus it can bring HSPA back to the venture.