Nov. 3 (Bloomberg) -- Nokia Siemens Networks may bid for Nortel Networks Corp.’s optical-networking business, challenging Ciena Corp. for the unit of the insolvent communications equipment maker, said two people familiar with the matter.

Buying the assets would help Espoo, Finland-based Nokia Siemens expand in North America, according to one of the people, who declined to be identified because the auction isn’t public. The unit operates in more than 65 countries, providing high- speed data networks in cities. The bid deadline is Nov. 9 and the auction is set for Nov. 13.

Nokia Siemens will have to bid more than the $506 million Ciena is offering to win the business. Nortel has sold off units piecemeal since entering bankruptcy protection 10 months ago, raising more than $2 billion so far. Nokia Siemens, facing increasing price competition from rivals, is cutting jobs to help pare expenses by 500 million euros ($732 million) in the next two years.

Ben Roome, a spokesman for Nokia Siemens, declined to comment. The joint venture between Finland’s Nokia Oyj and Siemens AG in Germany is the second-biggest telecommunications equipment supplier, after Ericsson AB. Bo Gowan, a spokesman for Toronto-based Nortel, declined to comment on whether there are additional bidders.

In July, Ericsson AB agreed to pay $1.13 billion for Nortel’s wireless assets using code-division multiple access technology, a standard used by many North American networks. That beat Nokia Siemens original offer of $650 million. Two months later Avaya Inc. won Nortel’s corporate phone gear unit with a bid of $915 million, after first offering $475 million.

Slow in North America

Nokia Siemens needs to expand in North America, where it has made a slow start in offering next-generation technology, said Jan Ihrfelt, a Stockholm-based analyst at Swedbank AB. Buying Nortel’s wireless assets “would have given them a real footprint in the U.S. which they lack today,” said Ihrfelt.

Ciena reached an agreement to buy the optical-networking unit on Oct. 7 through a so-called stalking-horse bid, where a single buyer provides a lead bid that other parties can then try to top. The company offered $390 million in cash and 10 million shares of common stock. Ciena, based in Linthicum, Maryland, makes fiber-optic gear for the biggest U.S. phone companies.

Revenue at Nortel’s Metro Ethernet unit, which accounts for most of what is being sold in the auction, fell 27 percent in the second quarter to $333 million.

Nicole Anderson, a spokeswoman for Ciena, didn’t immediately return calls seeking comment.

Ciena advanced 44 cents, or 3.8 percent, to $12.03 at 4 p.m. New York time on the Nasdaq Stock Market. The stock has declined 7.8 percent since the company made the bid for the Nortel assets.

Separately, Nokia Siemens said today that it may eliminate 7 percent to 9 percent of its 64,000 jobs. The company reported a third-quarter operating loss of 53 million euros as the venture’s revenue for equipment and other services fell 20 percent.

To contact the reporters on this story: Serena Saitto in New York at ssaitto@bloomberg.net

Last Updated: November 3, 2009 16:04 EST