Nokia Siemens Said to Renegotiate Motorola Solutions Deal

Nokia Siemens Networks is seeking to renegotiate its $1.2 billion purchase of wireless network assets from Motorola Solutions Inc., according to two people close to the situation.

The network-equipment joint venture between Nokia Oyj (NOK1V) and Siemens AG (SIE) wants to exclude the Global System for Mobile communications, or GSM, unit from the acquisition and renegotiate the price accordingly in order to win antitrust approval by the Chinese government, said one of the people, who declined to be identified because the talks are private.

The Espoo, Finland-based company said March 9 that the deal won’t close in the first quarter, resulting in the second delay in three months. Motorola Solutions said the Chinese government extended its review period for another 60 days. The purchase, announced in July when the two companies targeted a year-end close, won approval of the U.S. and European Union regulators.

“When you look at what Nokia Siemens is acquiring, I don’t think GSM was a big piece of what they were trying to get their hands on,” said Matthew Thornton, a Boston-based analyst with Avian Securities LLC. “I think the North American market which is of course the CDMA assets was probably a lot more strategically important to them.”

Photographer: Tim Boyle/Bloomberg

Nokia Siemens Network Chief Executive Officer Rajeev Suri. Close

Nokia Siemens Network Chief Executive Officer Rajeev Suri.

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Photographer: Tim Boyle/Bloomberg

Nokia Siemens Network Chief Executive Officer Rajeev Suri.

Ben Roome, a spokesman for Nokia Siemens Networks, declined to comment as did Schaumburg, Illinois-based Motorola Solutions’ spokesman Nick Sweers.

GSM Operations

Motorola Solutions slid as much as 3.4 percent in New York and traded down 1.6 percent at $40.32 as of 11:38 a.m. local time. Siemens fell 0.3 percent to 89.60 euros in Frankfurt, while Nokia slipped 2.6 percent to 5.74 euros in Helsinki.

Avian’s Thornton estimates the GSM business probably accounted for about $900 million to $1 billion of Motorola Solutions’ revenue in 2010, or about 25 percent of the total networks business sales. It probably contracted from about 35 percent of revenue, or $1.4 billion, in 2009 as carriers spent more on CDMA networks last year, he said.

Nokia Siemens was formed in 2007 from the merger of equipment units of Nokia and Siemens, both of which promoted the GSM standards used by most carriers outside the U.S. and east Asia. Motorola Solutions sells GSM systems as well as gear based on CDMA, which is used by some North American and east Asian carriers, and so-called fourth-generation technologies LTE and WiMAX. Nokia Siemens also has LTE contracts.

Chinese Objection

Nokia Siemens’ purchase is aimed at buttressing its position as the world’s second-largest maker of wireless network equipment, competing with Stockholm-based market leader Ericsson AB, China’s Huawei Technologies Co. and Paris-based Alcatel- Lucent SA. It would bring more than 50 accounts at existing or new customers, significantly expanding its reach in the U.S. and Japan, Nokia Siemens said when it announced the deal.

The Chinese antitrust review comes after Huawei, China’s biggest maker of telecommunications equipment, sued Motorola and Nokia Siemens Jan. 24 saying Motorola hadn’t provided assurances that it would prevent disclosures about Huawei technology and products to Nokia Siemens. Motorola has sold Huawei’s wireless- network products under the Motorola name since 2000.

Last month, Huawei had to withdraw its purchase of Santa Clara, California-based 3Leaf Systems’ patents, in compliance with a recommendation by the Committee on Foreign Investment in the United States due to concerns for national security.

To contact the reporter on this story: Serena Saitto in New York at ssaitto@bloomberg.net; Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

To contact the editor responsible for this story: Vidya Root in Paris at vroot@bloomberg.net

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