Motorola to focus on iDEN activities after deal

BANGALORE, INDIA: Nokia Siemens Networks is buying Motorola's telecom network equipment business for $1.2 billion, getting a stronghold in the North American market and taking No. 2 position in the cut-throat mobile gear market.

In an e-mail interview with CIOL, Julien Grivolas, Principal Analyst, Mobile Infrastructure and Technologies, Ovum’s, talked about the potential of the deal. Excerpts:

CIOL: What will be focus of Motorola post NSN deal?

JG: Motorola was planning to split into two separate entities:

Motorola Mobility = Devices + Home business units

Motorola Solutions = Enterprise + Network business units

Given the acquisition, within Motorola Solutions, Motorola's Network activities targeting service providers will be limited to the iDEN activities. Motorola also retains all the patents related to its global wireless businesses, but NSN will have unlimited access to them through a perpetual cross-license. The intellectual property rights were kept because they are considered valuable to other Motorola businesses.

CIOL: How will the new deal boost Nokia Siemens Network's standing?

Julien Grivolas: NSN has stated that there were still too many players in the wireless equipment industry and that its goal was to remain one of the top three players in the future. To achieve this goal, NSN was convinced that it had to reinforce its position in the US in particular.

Having historically been out of the CDMA business, NSN had a weak position in the US market despite some deals in the mobile core segment (such as an IMS deal with Verizon Wireless for its LTE project) and in the optical area. After its failed attempt to acquire Nortel’s CDMA/LTE assets, Motorola was NSN’s last potential target to achieve this goal.

Also read: Nokia Siemens wins $7 bn U.S. deal

Globally, this deal is mostly about scale and reach. The deal also marks NSN’s entry into the CDMA business, as well as its comeback in the WiMAX infrastructure market. Adding Motorola’s wireless RAN assets — which represented a turnover of $3.7 billion in 2009 — will make NSN better positioned to compete against Ericsson, Huawei, and Alcatel-Lucent.

In the US, the acquisition gives NSN an immediate footprint in the wireless infrastructure business through Motorola’s contracts with Verizon Wireless and Sprint for CDMA, as well as with Clearwire for WiMAX. NSN claims that it will consequently become the number three supplier instead of being number five in the US.

The move also significantly strengthens NSN’s position in Japan. KDDI is a long-standing CDMA customer of Motorola and is one of the two commercial LTE customers Motorola has been able to secure. Already selected by NTT DoCoMo for LTE, NSN claims that it will be the largest foreign supplier in the advanced Japanese market following the acquisition.

Also read: Ericsson showcases first TD-LTE solution

CIOL: Why do think Motorola choose NSN against other potential suitors?

JG: Good complementary fit (technological and geographical). Huawei and ZTE were also in the mix but would have struggled to close such an acquisition for political reasons.

CIOL: What about the employees of Motorala Wireless Networks Unit in different countries?

JG: NSN's CEO said that there is no lay-off plan so far.