OVUM評論：NSN to acquire certain wireless infrastructure assets of Motorola

“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 centers as part of the deal, and approximately 7,500 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 is again an active player driving wireless network equipment industry consolidation

NSN 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. 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. Huawei and ZTE were also in the mix but would have struggled to close such an acquisition for political reasons.

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 Japanese market following the acquisition.

NSN rightly remains out of the iDEN business

iDEN is a proprietary technology developed by Motorola, and only Sprint-Nextel and Nextel International’s affiliates use it. Acquiring this declining business would have made no sense for NSN as there would have been no synergies. Unsurprisingly, Motorola will retain the iDEN business. Motorola will also retain 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.

LTE may be the most challenging segment from an integration perspective
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. We anticipate 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. NSN has been positioning its smooth software-based evolution path for its 3GPP customers as being a key differentiator. Motorola has taken a similar approach to market its solution to its WiMAX customers (such as Clearwire). How to reconcile the two solutions while ensuring synergies is a question mark to us. From a rationalization point of view, TD-LTE may even be the most strategic part of the integration.”