INTERVIEW: Nortel Deal Boosts Ericsson's US Position - CFO

L.M. Ericsson Telephone Co.'s (ERIC) acquisition of part of Nortel Network Corp.'s (NRTLQ) assets will give the Swedish equipment vendor a strong position on the fast-growing North American telecommunications market, Chief Financial Officer Hans Vestberg told Dow Jones Newswires Monday.

Ericsson late Friday agreed to acquire Toronto-based Nortel's CDMA and LTE assets for $1.13 billion, beating a previous $650 million bid from rival Nokia Siemens Networks (NOK, SI).

The deal further increases Ericsson's presence in the U.S. after the company earlier July signed a seven-year deal to run the networks of Sprint Nextel Corp. (S).

"We will gain access to a customer base in the U.S. within CDMA, which is very important," said Vestberg, who in January will take over as chief executive of Ericsson.

Ericsson will take over a number of CDMA contracts through the Nortel acquisition, with North American operators including Verizon, Sprint and Leap. Vestberg said the operators will eventually roll out networks based on Long Term Evolution, a new high-speed technology, and added that his company will have a good chance to gain LTE equipment orders from them after building a relationship within CDMA.

Although the Code Division Multiple Access, or CDMA, technology is about to be phased out in North America, Vestberg said there will be demand for CDMA infrastructure for a few more years, and for network maintenance many years thereafter, so that the CDMA contracts will be profitable in their own right.

The acquisition will improve Ericsson's market share in the U.S., Vestberg said, but added that the company will still face competition from rivals such as Alcatel-Lucent (ALU), which has a strong CDMA business.

At 1313 GMT, shares in Ericsson were down 1.8% at SEK70.20, against a 1.4% drop in the wider market in Stockholm.

Company Web site: http://www.ericsson.com

-By Gustav Sandstrom, Dow Jones Newswires; [phone]; [e-mail]