Nokia Siemens Networks to increase U.S. customer base with Motorola purchase

Nokia Siemens Networks should be able to increase its presence in the United States and Japan with the announced acquisition of Motorola Inc.’s networks business. The $1.2 billion acquisition was hinted at last week. Motorola will retain its iDEN networks business.
Nokia Siemens will pick up Motorola’s CDMA, GSM, wideband CDMA and LTE business, which counted sales of about $3.3 billion in 2009. ”We like to think we are buying at least part of the history of innovation at Motorola,” said Rajeev Suri, CEO of NSN. “First and foremost, this deal is about customers,” Suri noted. “We expect to gain an incumbent position with many of our customers. … Second the deal is about scale and building our presence in some regions.” Suri noted that the merger will move NSN from the No. 5 in North America to No. 3, as well as strengthen its position in Japan, including a contract with KDDI Corp. Motorola also counts contracts with Verizon Wireless and Clearwire Corp., among others.
About 7,500 Motorola employees will move over to NSN, and NSN will retain its presence in Illinois, where about 1,600 employees reside, Suri said. No layoffs are anticipated. The acquisition is expected to close at the end of this year. NSN will finance the purchase with its internal cash reserves and existing third-party financing solutions. “It’s a beautiful addition to our customer portfolio.”
Motorola Solutions will keep its iDEN business, which counted $400 million in sales in 2009, as well as its enterprise, government and public-safety business. Motorola Co-CEO Greg Brown said the sale will enable the Solutions business to be a pure-play company. Indeed, Motorola’s Enterprise Mobility Solutions business is predicting a compounded annual growth rate between 5% and 8% over the next few years, with opportunities to sell equipment and services into public-safety and vertical market enterprises.
A handful of CDMA patents will go to NSN under the deal, but Motorola will retain most of the intellectual property rights. NSN will be able to cross-license that IPR without paying for the IPR.
Amid speculation last week, Daryl Schoolar, principal analyst, wireless infrastructure, at Current Analysis, said a link-up between Motorola and NSN would be a great way for NSN to get a better toehold in the North American market. It’s no secret that NSN wants a stronger North American presence, having tried to buy Nortel Networks Ltd. previously. Along with Motorola’s CDMA and GSM assets, an acquisition would also give NSN Motorola’s existing business relationships, as well as its LTE and TD-LTE assets, Schoolar noted.
Motorola had been trying to sell its networks business as part of its plan to separate the company into two pieces in 2011. Huawei Technologies Inc. was also rumored to be interested in the equipment business.