Ericsson AB, the giant Swedish telecom-equipment maker, is poised to build the world's next generation of wireless networks after winning an auction yesterday for most of the wireless assets of bankrupt Nortel Networks Corp.

In the proposed deal, subject to regulatory and bankruptcy court approval in Canada, the U.S. and Europe, Nortel will be paid only $1.13 billion (U.S.) for its most valuable business. That's about half what Nortel was expecting the unit to fetch when it filed for bankruptcy protection in January and began a rapid dismantling of Canada's long-time R&D flagship in fire-sale deals with foreign buyers.

Ericsson may just have struck one of the best deals in the industry's recent history. It will almost double the Stockholm-based firm's sales in North America, which will become its biggest wireless market. Over the next two to five years, Ericsson's North American market share will soar by almost 30 per cent, and its global share by more than 5 per cent.

Ericsson is to obtain Nortel's commanding position in CDMA, or code division multiple access, the standard for wireless networks serving more than half of the U.S.

Like Nokia Siemens Networks BV, a losing bidder yesterday for the Nortel unit, Ericsson's current strength is in GSM, or global system for mobile communications, the dominant wireless standard outside North America.

As a fading technology destined to disappear over the next decade, CDMA won't require lavish R&D spending by Ericsson, as its CEO noted yesterday. Which means it throws off a lot of cash. More important, CDMA is the ideal "platform" from which the world's telecoms will migrate to the next-generation wireless standard, LTE, or long-term evolution, in which Nortel has a significant edge.

LTE increases both speed and bandwidth. That will enable Nortel cellphone-network customers like Bell Canada and U.S. giants Verizon Communications Inc., Sprint Nextel Corp. and Leap Wireless International Inc. to peddle lucrative, bandwidth-hogging services such as interactive TV, video blogging and sophisticated games to users of cellphones, smartphones and netbooks.

"The Nortel unit is very profitable," Pierre Ferragu, a London-based industry analyst at Sanford Bernstein, told Bloomberg News yesterday.

"I was surprised to hear that Nokia Siemens let Nortel go to Ericsson at such a low price."

Ericsson by no means has a lock on the prize. Its deal with Nortel is not set to close until later this year, plenty of time for Nokia Siemens to trump Ericsson's offer. Or for Waterloo-based Research in Motion Ltd., the BlackBerry smartphone maker, to launch a formal bid. RIM last week expressed a willingness to pay roughly the same $1.1 billion (U.S.) with which Ericsson won yesterday's auction.

The near giveaway price Ericsson is offering for Nortel's prized CDMA and LTE technology and patents, which alone are expected to generate an effortless revenue stream of $2.9 billion (U.S.) over the next 15 years, is likely to bring pressure on Nortel's board from creditors anxious to see more generous proceeds from Nortel's fire sale of assets.

Nortel has a history of negotiating sale and joint-venture deals this decade, with Siemens AG, Nokia Corp., Avaya Inc. and Brookfield Asset Management Inc., among others, that failed to come to fruition.

Ericsson's due diligence will also reveal that many key Nortel engineers working on LTE have defected since Nortel's bankruptcy filing, including former LTE general manager Doug Wolff. Like many other ex-Nortel engineers, Wolff now works at Ericsson rival Alcatel-Lucent SA of France.

And if Ottawa is persuaded by RIM's argument that Nortel's wireless assets are of national strategic importance, it can invoke provisions of the Investment Canada Act. Last year, Ottawa blocked a deal in which arguably less important assets were at stake when it prevented MacDonald Dettwiler and Associates Ltd. from selling its satellite and robotics technology to U.S. rocket maker Alliant Technologies Inc.

Late last week, both Jim Flaherty, the federal finance minister, and Tony Clement, the industry minister, expressed disappointment that a Canadian firm was excluded from the bidding for the Nortel wireless assets.