Ericsson will buy Nortel Networks Corp.'s GSM business in the U.S. and Canada for $70 million on a cash and debt free basis

STOCKHOLM -- Swedish network equipment vendor Telefon AB L.M. Ericsson said Tuesday it will buy Nortel Networks Corp.'s GSM business in the U.S. and Canada for $70 million on a cash and debt free basis, having bought the bulk of its second-generation mobile networks as well as newer network technology earlier this year.

The transaction, which has helped make North America Ericsson's biggest market, is expected to have a positive effect on the company's earnings within a year after closing, although analysts said the impact will be relatively small.

GSM, or Global System for Mobile Communications, is the dominant second-generation mobile phone standard in the world, but Code Division Multiple Access, a rivalling second-generation technology, is still equally important in North America.

Ericsson last week said it had completed the acquisition of Nortel's CDMA assets, as well as its LTE, or Long Term Evolution, assets in North America. It said in June it would buy the assets for $1.13 billion. LTE is the latest mobile network technology, allowing faster wireless download and data transfer speeds.