A bid by two well-known Ottawa businessmen to become the first Canadians to buy part of bankrupt Nortel has failed.

Ericsson, the telecom giant from Sweden, outbid the local group and will pay $65 million for the multi-switch network infrastructure business.

Adam Chowaniec and Pat DiPietro bid $39 million in August.

"We really wanted to get at least one part of Nortel into Canadian hands," DiPietro told CTV Ottawa in an e-mailed statement.

"This was the last and best shot anyone had . . . our plan was to have the global head office here in Ottawa and re-build this . . . into a leading vendor. I am a firm believer that Canada is allowing its technology leadership capability to erode. I fear for our kids and their kids when our bounty of resources becomes exhausted. They will be living in a third world country."

DiPietro is not allowed to comment directly on the deal until it closes.

In all, Ericsson has now spent nearly $2 billion to buy four Nortel units. The largest was the wireless business, which includes about 1,000 Ottawa workers.

This deal involves 250 employees. The general manager of the unit is based in Ottawa.

CTV News has been told this means just 2,000 people still work for Nortel. Nine years ago, 95,000 were employed.