Swedish telecom major Ericsson has bought Nortel's wireless business for $1.13 billion.
In a statement Saturday after Friday's court-monitored auction in New York, Ericsson said it has acquired Nortel's CDMA and futuristic long-term evolution (LTE) technology.
LTE will allow carriers to offer cell phones with advanced features such as online gaming and video streaming.
The transaction is subject to court and regulatory approvals.
The Swedish giant said the acquisition would expand its base in North America.
"Acquiring Nortel's North American CDMA business allows us to serve this important region better as we build relationships for the future migration to LTE," said Ericsson chief executive Carl-Henric Svanberg.
"Furthermore, by adding some 2,500 highly skilled employees, of which about 400 are focussed on LTE research and development, Ericsson reinforces and expands a long-term commitment to North America," he said.
The agreement also includes CDMA contracts with North American operators such as Verizon, US Cellular, Bell Canada and Leap.
After a troubled decade, the 127-year-old Nortel went under the hammer Friday in New York to sell its wireless business. Its other divisions -- the enterprise unit and the metro Ethernet networks unit -- are also lined up for sale.
Nokia Siemens Networks with an initial offer of $650 million, American private equity firm MatlinPatterson with $725 million and Sweden's Ericsson with $730 million were in the fray.
Despite its offer of $1.1 billion, Nortel shut Canada's Research In Motion (RIM), the maker of BlackBerry, out of the bidding process after refusing to sign non-disclosure agreements.
An angry BlackBerry co-chief executive Jim Balsillie had even appealed to the Canadian government to stop Nortel from selling its crucial next-generation wireless technology LTE to foreign players. But analysts here suspected that the BlackBerry maker was interested only in having a peek at the crucial technology.
Nortel, which once employed 90,000 people worldwide, has been operating under bankruptcy protection since January after posting losses of $5 billion last year.
A further loss of $507 million in the first quarter of this year sank it deeper.
The telecom giant's accumulated problems -- from the bubble burst to internal accounting scandal to the current meltdown -- forced it to seek bankruptcy protection in the US and Canada this January, just ahead of its $107 million interest payment.