The Swedish telecommunications provider Ericsson pledges to invest KRW2 trillion in South Korea- which was made during President Lee Myung-bak's state visit to Sweden in July of last year. This is likely to materialize by acquiring the cash-strapped Canadian telecom equipment maker Nortel's controlling stake in LG-Nortel. LG-Nortel is a joint venture of LG Electronics and Nortel.
There has been a lot of talk inside LG-Nortel and Ericsson, regarding the possibility of launching "LG-Ericsson." Once Ericsson buys into LG-Nortel, the Swedish telecom will see their status significantly elevated in the South Korean telecommunications market. Last July, Ericsson plans to invest KRW2 trillion into the South Korean market in the next five years. At that time, the public stopped short of welcoming Ericsson's announcement with open arms, casting doubt over the amount of money invested and the feasibility of its investment scheme.
In view of what it would cost Ericsson to acquire Nortel's controlling stake in LG-Nortel and to raise R&D funds later on. The jigsaw pieces seem to be fitting together for Ericsson and the completed picture is a promise of KRW2 trillion. It has been confirmed the employees at Ericsson Korea are informed that Ericsson is one of the likeliest potential buyers of LG-Nortel, and the final-stage of negotiations are underway. It hints that LG Electronics and Goldman Sachs hired Nortel to find a buyer and have it tilted in favor of Ericsson.
Still, much more needs to be done, including taking care of relations with French phone equipment group Alcatel-Lucent, who acquired Nortel's 3G Universal Mobile Telecommunications System (UMTS) unit.
However, the deal is projected to be finalized no later than March 31. Industry insiders said, "There has been controversy over whether Ericsson's purchase of Nortel's majority stake in LG-Nortel is a Korea bound investment. However, if Ericsson finalizes the deal, and deliver what it promised last July to emerge as a global 4G market leader at the same time.”
