Nortel Networks on Monday declined to comment on a news report that the company is negotiating with Motorola to combine wireless infrastructure units.

"Nortel doesn't comment on rumors and speculation," a Nortel spokesman said.

The two companies are talking as a way to cut costs in a network equipment market that is consolidating and facing stiff competition, The Wall Street Journal reported Monday.

The deal with Nortel would be separate from Motorola's announcement last month that it was considering spinning off its mobile handset business, the Journal reported. Motorola on Jan. 31 announced it was looking at separating the lagging handset division from the rest of its business.

A Motorola spokeswoman wasn't immediately available for comment Monday.

A combined wireless infrastructure unit would have sales around US$10 billion, the Journal reported. Talks between Motorola and Nortel have been going on for about a month, the news report said, and under one scenario, Nortel would own a majority of the joint venture.

Both companies have faced challenges recently. Motorola last month reported a loss of $49 million for 2007, due largely to declining handset sales.

But fourth-quarter 2007 sales were up in the Home and Networks Mobility group, which makes set-top boxes and wireless infrastructure. The group saw sales rise 11 percent to $2.7 billion from the fourth quarter of 2006.

Last year, the U.S. Securities and Exchange Commission charged seven former Nortel executives with participating in a 2003 accounting fraud by manipulating reserves to manage Nortel's earnings.

Last February, Nortel announced it would lay off 2,900 employees and move another 1,000 jobs to low-cost locations throughout 2007 and 2008.