NSN Snatches Up Motorola’s Wireless Infrastructure – Final Take

Event Summary

July 19, 2010 – Nokia Siemens Networks and Motorola announced the planned acquisition of Motorola’s wireless infrastructure assets for $1.2 billion in cash. Expected to close by year-end, NSN expects to take on 7,500 employees, gain a leading position in WiMAX, and become the number three wireless infrastructure vendor in the U.S., the number one foreign wireless vendor in Japan and the second overall global position for infrastructure. NSN and Motorola will also explore a public safety partnership leveraging NSN’s LTE solutions.

Quick Take

Analytical Summary

• Current Perspective: Positive on NSN’s planned acquisition of Motorola’s wireless infrastructure business. To be sure, the ultimate value of any acquisition depends on execution and there is no shortage of questions around the deal: what will this mean for Motorola’s public safety business, how will Motorola products live on and how will Motorola’s services professionals be integrated? Regardless, the move instantly helps NSN execute on a strategic goal of strong North American sales while adding to its revenue and R&D scale and position in markets like Japan and the Middle East. Motorola, meanwhile, sees its wireless business drive immediate shareholder value – even if its break-up plans are somewhat complicated.

• Vendor Importance: High to NSN, because the deal will significantly alter the vendor’s product portfolio and occupy it with integration work for the next 12 to 18 months. Beyond the addition of new WiMAX and CDMA2000 products, NSN will need to spell out a plan for GSM and WCDMA product rationalization – presumably transitioning Motorola customers to NSN’s Flexi platform. It will also need to integrate Motorola wireless products into larger solutions including NSN assets (e.g., in the mobile packet core and service layer). Doubtless, NSN could have continued to live on without the acquisition. To compete with an insurgent Huawei and ZTE, however, the added scale and scope Motorola brings looks to be critical to its long-term success and worth the near to medium-term work it creates.

• Market Impact: Very high on the wireless infrastructure market since one vendor will be leaving the market and another will, ostensibly, be strengthened. The added scalability (and profitability) should help to make NSN a more credible/viable vendor in the long-term as it competes with mainline 2G and 3G vendors. The added scope and solutions focus should improve Motorola’s current position in markets like CDMA and WiMAX.

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Competitive Positives and Concerns

Response & Recommendations

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Analytical Perspective

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