Nokia Siemens Networks is buying Motorola’s network equipment business for $1.2 billion. The deal is expected to close at the end of the year. The Wall Street Journal reports:
Telecom equipment vendor Nokia Siemens Networks said Monday it has agreed to pay $1.2 billion for the majority of U.S.-based Motorola Inc’s (MOT) network equipment business in order to gain a stronger foothold in the important North American and Japanese markets.
Nokia Siemens, a joint venture between Finland’s Nokia Corp. (NOK) and Germany’s Siemens AG (SI) said it expects the transaction to strengthen its business relationships with a number of telecom operators including China Mobile Ltd. (CHL), Sprint Nextel Corp. (S) and Vodafone Group PLC (VOD).
As a result of the deal, Nokia Siemens expects to become the largest foreign wireless gear vendor in Japan, the third-largest in the United States, and to strengthen its number two position in the global infrastructure segment. Sweden’s Telefon AB L.M. Ericsson is currently the world’s largest network equipment vendor, ahead of Nokia Siemens, Paris-based Alcatel-Lucent (ALU), and China’s Huawei Technologies Co.
Motorola’s decision to break up the company through the sale of its network equipment business was demanded by activist investor Carl Icahn and aims to increase the company’s market value. The company hopes it will force analysts to assess the cellphone and cable set-top boxes businesses separately from the remainder of the company, which makes public-safety equipment and handheld scanners.
Computerworld’s Peter Sayer puts the merger into context:
Nokia Siemens will acquire manufacturing operations for all the major wireless systems, including GSM (Global System for Mobile Communications), CDMA (Code-Division Multiple Access), WCDMA (Wideband Code-Division Multiple Access), WiMax and LTE (Long-Term Evolution).
Motorola was a rarity in the mobile phone business, producing both handsets and network infrastructure. Most of the other big players have already split their operations. Ericsson retained its network business but formed a joint venture with Sony to make phones; Alcatel sold its handset manufacturing operations (although it still sells those handsets under its own brand in France), and Siemens got out of both businesses, selling its mobile phone subsidiary and pooling its infrastructure business with Nokia to form Nokia Siemens Networks, the company buying Motorola’s infrastructure activities.