NSN acquires Motorola's wireless assets

NSN has announced plans to acquire Motorola’s GSM, CDMA, WCDMA, LTE, and WiMAX wireless assets for $1.2 billion. NSN will acquire several R&D centres as part of the deal, and approximately 7500 Motorola employees are expected to be transferred to NSN. The companies expect to complete the acquisition by the end of 2010, subject to customary closing conditions including regulatory approval.

NSN has stated a number of times during the past two years 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.  After its failed attempt to acquire Nortel’s CDMA/LTE assets, Motorola was NSN’s last potential target to achieve this goal. Huawei and ZTE were also in the mix but would have struggled to close such an acquisition for political reasons.

Julien Grivolas, Principal Analyst at Ovum, said, "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."

Japan's 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 Japanese market following the acquisition.

Not being in the CDMA business, NSN will just add Motorola’s CDMA portfolio to its own wireless portfolio and will certainly follow Motorola’s current strategy in this segment, which is to ensure profitability by focusing on the requests of its largest customers. Being active in CDMA will better position NSN to tap into the CDMA-to-LTE business opportunity.

We expect that NSN will gradually encourage Motorola’s GSM references to migrate to NSN products. In the UMTS/HSPA domain, Motorola was reselling Huawei’s solutions. Ovum anticipates that NSN will eventually try to attract these references as well.

NSN has been reselling WiMAX solutions from Alvarion since its decision to stop in-house development. With $600 million in revenues, Motorola is a leading WiMAX vendor and NSN will rely on these solutions going forward.

From an integration perspective, the two product lines are mostly complementary except perhaps for LTE. Both NSN and Motorola have invested in the development of LTE (FDD and TDD) solutions.

Optus has successfully conducted LTE trials and demonstrations in metropolitan Sydney as part of the first phase of LTE testing on the Optus mobile network using NSN's LTE. The results have showcased significantly reduced network latency, improved connectivity and enhanced mobile streaming capabilities when compared to 3G. Lab tests reached speeds of up to 73 Mbps over 10 MHz of spectrum. Optus will conduct the second phase of testing over the coming months using the 1800 MHz spectrum band.

The SingTel group is conducting LTE trials regionally encompassing Australia, Indonesia, Philippines and Singapore in collaboration with Optus, Telecom and Telkomsel.