The CEO of Nokia Siemens is trying to reassure Ottawa employees that a deal to buy up much of Nortel's wireless division will benefit workers in the capital.
The capital is home to the bulk of Nortel's research on new wireless technology, known as LTE.
Nokia Siemens CEO Simon Beresford-Wylie told a news conference on Monday that pretty well every Ottawa employee who is connected to CDMA and LTE technology will be kept on.
He also said he expects to increase the size of Ottawa's centre as it becomes the Nokia centre for wireless research. It is unclear whether Nokia will stay in the same building.
Beresford-Wylie said the deal is good for Canadians because it keeps cutting edge research and jobs in Canada.
"We believe passionately that this will help keep Canada at the forefront of next generation wireless research and development and most importantly maintain jobs in Canada," Beresford-Wylie said.
The deal, announced late Friday night, stipulates that at least 2,500 Nortel employees will carry on with Nokia Siemens and hinges on approval from the United States Bankruptcy Court.
The bulk of Nortel employees affected by the deal are in the United States, mostly in Dallas, and about 800 others are scattered across Canada.
Beresford-Wylie said Nortel employees will be able to transfer their years of service to Nokia and receive benefits. However, Nokia Siemens will not assume any pension or health benefits as part of the deal. Those benefits will remain with Nortel as it sells off its assets.
"We're not expecting to bring any other liabilities from a benefits perspective," said Michael Matthews, head of strategy and business development for Nokia Siemens.
The head of the wireless division will be in Ottawa to hold a staff meeting on Tuesday. In the meantime, Nokia Siemens has put up a website to give basic details to employees.
"People are worried they are concerned. We explained to them today what we are going to do and I think they could accept that we have a firm plan going forward for Nortel," said Samih Elhage, Nortel's senior man in Ottawa and president of Carrier Networks.
Although there are still many details to be worked out, some employees told CTV Ottawa the deal comes as a relief: "It offers the chance for some stability and the change for a brighter future," said one employee.
The price tag of the deal is US$650 million, which observers say is perhaps 40 per cent lower than the unit would have been worth if economic times were better.
Negotiations started shortly after Nortel sought bankruptcy protection back in January, said Beresford-Wylie. The deal was only finalized in the last month as Nortel clearly pushed to sell off all its business units.
Although Nortel's CEO previously said he wanted to revive the struggling company, Mike Zafirovski is now in advanced talks to sell other parts of the tech giant within a matter of weeks or months.
Observers say now that the first deal is done, those sales could come very quickly.
Nortel's shares were suspended by the Toronto Stock Exchange on Monday. The company's shares were worth the equivalent of $1,245 in July 2000. Its shares closed at 18.5 cents on Friday.
For Nokia Siemens, Beresford-Wylie said the deal instantly expands the company's market in North America, which he expects to increase from five per cent of the wireless market to 30 per cent.
Nearly half the financing for the deal comes from the federal Export Development Corporation.
Although Nokia Siemens says the $300 million was "not a deal breaker," the company said the money played an important role in making the deal happen.
Nokia Siemens claims to be the number two company in telecom and wireless services globally.
With a report from CTV Ottawa's Paul Brent and files from The Canadian Press
