TORONTO - Toronto-headquartered Nortel, which is under bankruptcy protection in both the US and Canada, has announced that it will liquidate itself.

In a statement issued Friday, the 127-year-old Canadian telecom equipment giant said it has entered into a deal with Nokia Siemens to sell its wireless business for $650 million.

“This (sale) will ensure Nortel’s strong assets - technologies, customer relationships and employees - continue to play an important role in driving the future of communications. The value of Nortel’s wireless business is recognised throughout the industry,” said Nortel president and chief executive Mike Zafirovski.

“The agreement we are announcing today is solid proof of that value and represents the best path forward for our other businesses,” he added.

Once the biggest maker of telecom equipment and Canada’s most valuable company, Nortel said it was in advanced stages of discussions with other parties to sell its other businesses.

“Maximising the value of our businesses in the face of a consolidating global market has been our most critical priority. We have determined the best way to do this is to find buyers for our businesses who can carry Nortel innovation forward, while preserving employment to the greatest extent possible,” said Zafirovski.

Nortel, which once accounted for the bulk of the Toronto Stock Exchange (TSX), said it was delisting from the stock market.

“Trading in such shares on the TSX is expected to be suspended pending the TSX’s decision on the delisting application,” the statement said.

Nortel, which has been in business making telephones and later telecom technology since 1882, had to file for bankruptcy after suffering losses to the tune of $5 billion last year.

Even as its top bosses restructured the company and cut jobs, Nortel posted a further loss of $507 million in the first quarter ending March 31.

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.

Its bankruptcy plea was accepted ahead of its $107 million interest payment in January.

The telecom giant had announced last month to sell its majority stake in LG-Nortel, which it formed with Korea’s LG Electronics in 2005.

Nortel, which once employed 90,000 people worldwide, has about 30,000 employees now.

But under the deal with Nokia-Siemens, 2,500 of its employees will stay with the new company.