TORONTO - Canadian taxpayers helped fund the development of the next generation of wireless technology at Nortel Networks and the federal government should not allow it to fall into foreign hands, Ontario Finance Minister Dwight Duncan said Monday.
Duncan was reacting to news that Swedish giant LM Ericsson had agreed to purchase Nortel's profitable wireless business for US$1.13 billion, including its LTE, or long-term evolution technology, which will greatly speed up wireless transmissions.
"The long term evolution technology and the patents that go with that have a financial value - and more importantly - we believe a value both to the Ontario and Canadian economies," Duncan said in an interview.
"We're looking to the federal government to take a more active role in keeping that technology in Canada."
However, Industry Minister Tony Clement was non-commital Monday when asked if the federal government was prepared to take action to try and block the sale of Nortel to Ericsson.
"I'm not ruling out intervening and I'm not ruling out not intervening," Clement told reporters in Ottawa.
"Right now, in order to be non-prejudicial, I have to keep my options open obviously and make sure that all the facts are before me and the government."
"Very generous" Canadian tax incentives helped fund the research that led to Nortel's creation of LTE, said Duncan, and the next generation of wireless technology shouldn't be allowed "slip through our fingers" to a foreign company.
"Canadian and Ontario taxpayers have a real vested interest in this." he said.
"We think it's both a competitive imperative and an imperative on future technological growth and our continued leadership in the whole wireless field."
Duncan wants Ottawa to try to block the Nortel sale to Ericsson and to help broker a deal with Research in Motion (TSX:RIM) or another Canadian firm.
"We worked together to help companies like RIM and Nortel become world leaders," he said.
"Let's not simply walk away from this and allow this technology to go somewhere else, and the development jobs that go with it."
RIM made an informal $1.1-billion bid for Nortel, even though it did not participate in the Friday auction won by Ericsson. The company issued a statement Sunday saying it had not given up on acquiring Nortel's assets and patents, and called on Ottawa to intervene.
Clement said there was a national security test that the Nortel-Ericsson deal would have to pass before it proceeds, insisting he didn't want to "prejudge" the issue.
Ericsson expressed confidence Monday that its purchase of Nortel's wireless business would be approved, and said it's planning to ask Ottawa to help finance the deal, something Clement admitted was a possibility.
"Export Development (Canada) financing is available to any bidder, domestic or foreign, and the nature of the financing is to keep jobs in Canada," said Clement.
"While I know there's been a lot of commentary about how horrible it is that financing has been made available to a bidder . . . it was open to any other bidder, to RIM, Nokia, whomever. I think that's an acceptable and defensible position."
Ontario's New Democrats said the provincial Liberal government was in no position to lecture the federal Conservatives over Nortel's future, accusing both Queen's Park and Ottawa of "sitting on their hands" when steps could have been taken to help Nortel.
"Why weren't the McGuinty government and the Harper government at the table six months ago putting a deal together that would ensure that it stayed under Canadian ownership and control," asked NDP critic Howard Hampton.
"It's particularly galling for the McGuinty government, which waxes on about the knowledge economy. Well, Nortel by definition is the knowledge economy."
