Avaya wins auction for Nortel

Avaya Inc. was the winning bidder among three companies that wanted to buy the bulk of Nortel Networks Inc., including its government business.

Avaya will pay $900 million with an additional $15 million reserved for an employee-retention program.

The deal is subject to court approval as Nortel filed for bankruptcy protection in January. Other regulatory hurdles in the United States, Canada and Israel also must be cleared. The deal is expect to close by the end of this year.

Nortel Enterprise Solutions President Joel Hackney emphasized the deal’s benefit to customers during a conference call on Monday.

“This signals to the marketplace that there is investment protection and a clear path forward for our customers,” he said.

Yet one Nortel customer, Verizon Communications Inc., is concerned that Avaya will not pick up the support contracts that Nortel has with Verizon.

Verizon officials said that U.S. national security could be jeopardized if government systems that rely on Nortel equipment are not maintained and serviced, Reuters reported.

Hackney said he didn’t think Verizon’s objections would interfere with the deal closing.

Avaya and Verizon may work out an agreement in the meantime, Reuters reported.

For the government business, an Avaya-Nortel combination will be better positioned to meet customer needs, said Chuck Saffell, chief executive officer of Nortel Government Solutions.

“Our goal continues to be helping our customers provide security, livelihood and well-being for the citizens of the United States,” he said in a statement.