NSN swoops on Motorola’s network business as vendor consolidation intensifies

Nokia Siemens Networks (NSN) and Motorola today jointly announced that the companies have entered into an agreement under which NSN will acquire the majority of Motorola’s wireless network infrastructure assets for US $1.2 billion in cash. The companies expect to complete closing activities by the end of 2010.

As part of the transaction, NSN expects to gain incumbent relationships with more than 50 operators and to strengthen its position with China Mobile, Clearwire, KDDI, Sprint, Verizon Wireless and Vodafone.

NSN expects that based on revenue, with the addition of the Motorola wireless network infrastructure business, it will become the #3 wireless infrastructure vendor in the United States, the #1 foreign wireless vendor in Japan, and strengthen its current #2 position in the global infrastructure segment.

“This is an exciting acquisition that I believe has significant benefits for customers, employees and our shareholders,” said Rajeev Suri, CEO of NSN. “NSN will see the benefits of a deal that is expected to enhance profitability and cash-flow and to have significant upside potential.”

“Motorola is very proud of the operational and financial performance of our Networks business and its employees, who will now become a valuable addition to NSN,” commented Greg Brown, Co-CEO of Motorola. “We are excited to have reached this agreement to combine our Networks team with such an industry leader.”

Motorola’s networks infrastructure business extends to GSM, CDMA, WCDMA, WiMAX and LTE.

Around 7,500 employees are expected to transfer to NSN from Motorola’s wireless network infrastructure business when the transaction closes, including large R&D sites in the US, China and India. Motorola retains the iDEN business, substantially all the patents related to its wireless network infrastructure business and other selected assets.

NSN’s Suri, who was appointed CEO last September, says the acquisition will enhance profitability and cash-flow, as well as have significant upside potential

NSN and Motorola also are exploring a global relationship in the public safety arena. This relationship would combine Motorola’s leadership in providing solutions to public safety organisations with Nokia Siemens Networks’ commercial LTE solutions.

Just last month, Bruce Brda, Motorola’s senior vice president and general manager of Home & Networks Mobility at Motorola told Comm. that as a standalone business, Motorola’s network business generated revenues amounting to US$4.9 billion in 2009, making it amongst the smaller members of the highly competitive global telecom infrastructure suppliers’ club.

Smaller annual revenues meant smaller amounts that could be invested in R&D, meant less opportunity to take leadership positions in new technologies and developments, meant being faced with the potential of a shrinking market share. Brda said he was aware of such constraints but believed Motorola’s strategy to focus on the customers it already services, and focus on technologies in which it already enjoyed strong positions in, would be the correct one to assume in its post-separation life.