Looks like Ericsson and Alcatel-Lucent might finally have a serious competitor in the wireless equipment market.
The Finnish Mobile manufacturing giant agreed to acquire the telecommunication network infrastructure business of Motorola, which makes gears that wirelessly transmits voice, data and video on both the CDMA and GSM networks, for $1.2 billion.
A fire-sale for some. To put this in perspective, the Motorola unit generates $3.6 billion in annual revenue and $300 million in earnings before interest, taxes, depreciation and amortization.
Motorola’s wireless network equipment maker unit was also the last major one left in North America, after Nortel’s demise (based in Canada) and the Lucent’s buy-out by France-based Alcatel.
A move that would significantly bolster Nokia Siemens Networks’ (NSN) standings in the North American market, putting it in at number 3, after Ericsson and Alcatel-Lucent. There are now essentially five major vendors of wireless network gear in the world: Europeans Ericsson, NSN and Alcatel-Lucent; and Chinese Huawei and ZTE.
The acquisition will be completed towards the end of 2010 and would provide operators the freedom to choose from the existing mobile network equipment providers that include giants like Ericsson, Alcatel Lucent, Huawei Technology and NSN.
The deal would help NSN gain over 50 relationships and add an 7,500 more employees. This in itself can prove encouraging for NSN, given the fact that the manufacturer has been in hot waters; slashing employees and closing numerous offices in a bid to save cash. The major issue has been with the falling demand as well as fierce competition from Ericsson, Huawei in terms of prices.
Motorola on the other hand is eyeing for a broader and more profitable restructuring. The plan is to spinoff its Mobile phone unit as well as set top boxes operations over to Sanjay Jha the Co-CEO. The buyout is set to bring further relief to Nokia Siemens Networks as it would place the manufacturer at No. 3 in the USA, #1 in Japan. In a Press release, Bosco Novak the Head of Customer Operations at NSN said:
..the addition of the Motorola wireless network infrastructure business is targeted to ensure that we are well placed to meet those needs..we will utilize the combined strength of Nokia Siemens Networks’ TD-LTE solutions and Motorola’s WiMAX and LTE businesses, to better meet customers’ evolving technology and business needs.
The two are also looking ahead into exploring better global relation in the area of public safety. It will be interesting to see how the partnership progresses for the and that the integration can bolster their standings in the market.