Layoffs could hit 40 per cent of Nortel's Enterprise workforce in North America with a pending sale to Avaya, according a memo sent to staff by the division president.
The job cuts would affect North American workers outside of Washington. Labour laws in other countries make reductions more difficult.
The enterprise unit is believed to employ 500 to 600 in Ottawa and another 300 in Belleville, though layoffs have occurred in recent months.
Mitel seeks to exploit deal
Mitel sources told CTV Ottawa the company sees an opportunity to gain ground on their larger wireless competitors.
While Avaya seeks approval for the acquisition they will be vulnerable in the market because of an $8-billion debt load and a heavy overlap in product lines, the sources said.
A scheduled bankruptcy court hearing on the deal, with judges from both Canada and the United States, was delayed to Wednesday to allow extra time for reviewing the proposal.
Nortel Networks selected Avaya as the successful bidder for its Enterprise Solutions division following a weekend auction.
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.
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.
Meanwhile, Nortel pensioners presented a 17,000-signature petition on Parliament Hill Monday, calling for better legal protection.
With a report from CTV Ottawa's Paul Brent
