Nokia Siemens Networks buys Motorola assets

Nokia Siemens Networks (NSN) has announced a deal to acquire Motorola's wireless network infrastructure assets for US$1.2 billion.

The rumoured deal comes just weeks after Motorola filed a government order to split the company into Motorola Mobility and Motorola Solutions.

Motorola will retain its integrated Digital Enhanced Network business, along with most of the patents related to its wireless network infrastructure business and other selected assets.

NSN said that the Motorola deal will make it the number three wireless infrastructure vendor in the US and the number one foreign wireless vendor in Japan, while consolidating its current number two position in the global infrastructure segment.

The company will gain incumbent relationships with more than 50 network operators, and a large global footprint in CDMA assets with Motorola's 30 networks in 22 countries.

The companies are also exploring a potential global relationship that would combine Motorola's public safety solutions with NSN's commercial Long Term Evolution solutions.

Some 7,500 employees are expected to transfer from Motorola's wireless network infrastructure business to NSN when the transaction closes by the end of 2010.

NSN has been looking to expand its global network infrastructure reach for some time in anticipation of strong demand for next-generation mobile network access.

The company missed out to Nortel and US network equipment manufacturer Ciena on two acquisitions from bankrupt Canadian firm Nortel last year.

NSN and Motorola discussed the acquisition in an investors' call late today, where Rajeev Suri, Nokia Siemens Networks chief executive, said that existing Motorola networks customers would continue to get support in addition to a clear transition path to next-generation technologies.

"I believe the addition of Motorola's Networks business will significantly strengthen our worldwide presence … and reinforce our leadership position in the global wireless sector," Suri said.

Sylvain Fabre, Gartner UK research director, said that he broadly agreed with Suri's assessment. “In the midmarket, the likes of NSN are either too small to have a real breadth of products that can scale and so must concentrate on niche markets, or they can grow by acquisition, as NSN has done here.”

But he added that it would be crucial for NSN to integrate its new acquisitions quickly in order to reassure existing Motorola customers and the wider market.

Greg Brown, co-chief executive of Motorola, added that the deal left Motorola positioned as a “worldwide leader in pureplay mobility”, pointing to its retaining of its Integrated Digital Enhanced Network (iDEN) business and patent portfolio. “The deal purifies the portfolio, enabling it to unlock the value around the Motorola solutions business," he added.

Gartner’s Fabre commented: “As far as my view of the Motorola Networks business is concerned I felt they had really turned a corner after some difficulties, but were getting into the LTE space. The deal should remove the some of the scale and help them get into more niche businesses.”