Nortel Networks has selected Avaya as the successful bidder for its Enterprise Solutions division.

Avaya will pay US$900 million for the division plus an additional US$15 million for an employee retention program -- nearly double their original offer.

Canadian and U.S. court approvals will be sought at a joint hearing on Sept. 15. The deal could be closed by late this year.

The enterprise unit supplies landline phone systems and other communications equipment to businesses and large organizations. The division, Nortel's second largest, made US$2.4 billion in revenues last year.

"This is fantastic news for our customers," Nortel Enterprise Solutions President Joel Hackney said in a Friday statement.

"It provides the capability to chart our future with laser-focus, enabling customers to compete in new ways with greater scale and resources."

A special court hearing was held Friday to review allegations by Verizon Communications Inc. that U.S. national security is at stake because if Avaya wins the bid, they may not provide service to Nortel gear in key military and emergency systems.

Verizon told the Delaware court in filings that Nortel notified them on Sept. 2 that Avaya would not handle the contracts if it won the auction. The company believes Nortel won't have the capabilities to handle the contracts itself after the sale.

Most analysts gave Avaya the edge in the bidding process because the company seemed more eager. 

The enterprise unit is believed to employ 500 to 600 in Ottawa and another 300 in Belleville, though layoffs have occurred in recent months.

Many staff worry Avaya will cut more workers. The company said it will hire 75 per cent of Nortel's current staff

An Avaya spokesperson told CTV Ottawa on Monday that no further details on the sale would be released at the moment.

Nortel will also auction its Metro Ethernet Networks business, which could bring bids of $1.5 billion and includes the rights to technology that enhances the speed and capacity of current fibre optic networks.

Such faster connections are a lucrative commodity as more Internet users watch online video and transfer large files.

With a report from CTV Ottawa's Paul Brent and files from The Canadian Press