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Nokia (Siemens) snaps up Motorola (infrastructure)

The circle gets a little smaller

The smart choice: opportunity from uncertainty

Nokia Siemens, the infrastructure parts of Nokia and Siemens, is spending $1.2bn on Motorola's infrastructure business, further consolidating an already oligopolistic industry.

The deal should be completed by the end of the year and will give Nokia Siemens greater presence in Japan and America, not to mention CDMA and WiMAX assets. This would leave Motorola with just its handset division to get shot of so it can concentrate on providing radios for vertical markets and counting the cash.

Telecommunications infrastructure is a strange business, almost entirely dominated by a handful of players competing for a small number of very large contracts. The number of such contracts has been dropping lately as the developing world has developed, and deployment schedules for next-generation services have slipped. Nokia Siemens lost $1.1bn last year, and it's still a long way from making money, forcing the the company to keep busy cutting costs since then.

Those cuts include reducing the head count by around 6,000, which should leave space for the 7,500 people who'll be coming in from Motorola once this deal is completed. The enlarged Nokia Siemens will still only be the second largest infrastructure provider behind Ericsson, with Alcatel-Lucent and relative-newcomer Huawei filling out the rest of the oligopoly.

Motorola lacked the scale to compete properly in that business, though it managed some significant contracts that Nokia Siemens will be pleased to exploit – notably KDDI's LTE deployment in Japan.

One bit that isn't part of the sell off is Motorola's own iDEN (Integrated Digital Enhanced Network) technology or deployments. That's hardly surprising given the limited scale of iDEN deployments, but Motorola also retains ownership of all the related patents, which have to be worth a bob or two.

Selling off the infrastructure division is part of Motorola's plan to separate out its handset business, which should happen next year (assuming a buyer can be found). That will leave the company's shareholders with a big pile of cash, while the company goes on selling radios to the police and the bigger enterprises, and running those iDEN networks. ®

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