Nokia Siemens Postpones $1.2 Billion Motorola Deal Again

Nokia Chief Financial Officer Timo Ihamuotila
Nokia Chief Financial Officer Timo Ihamuotila. Photographer: Simon Dawson/Bloomberg

Nokia Siemens Networks, the network-equipment joint venture between Nokia Oyj and Siemens AG, delayed the closing of its $1.2 billion purchase of assets from Motorola Solutions Inc. for a second time within three months.

The deal won’t be completed in the first quarter as the Chinese government hasn’t given antitrust approval yet, the company said today in a statement. The Chinese Ministry of Commerce has extended its review period for another 60 days, Motorola Solutions said in a separate statement.

Nokia Siemens said Dec. 28 that the closing would probably occur in the first quarter after previously targeting a year-end close. Nokia Siemens spokesman Ben Roome said the company needs antitrust approval in each affected market and that it got all other approvals by the end of 2010.

“China may be using Motorola as a leverage point in the continuing controversy over the access of Chinese communications equipment suppliers to the U.S.,” said Daniel Hays, a Washington, D.C.-based partner with management consultants PRTM.

Huawei Technologies Co. said last month perceptions that the Chinese phone-network equipment maker threatens U.S. national security are unfounded. Huawei’s comments came a week after the company withdrew 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.

Failed Bids

Prior to 3Leaf, Huawei failed in bids to acquire companies including 3Com Corp. in 2008 and 2Wire and Motorola’s wireless business last year.

All the major telecommunications equipment providers do some of their development and manufacturing in China, so access restrictions on China-based companies are “somewhat unjustified,” PRTM’s Hays said.

The purchase would buttress NSN’s position as the world’s second-largest maker of wireless network equipment. It would bring more than 50 accounts at new or existing customers, significantly expanding the company’s reach in the U.S. and Japan, Nokia Siemens said when it announced the deal.

“When we look at the fourth-quarter market numbers for the networks business in general, including Huawei, Ericsson et cetera, there was more growth than we expected,” Nokia Chief Financial Officer Timo Ihamuotila said at a UBS conference today. “We really want to provide the NSN management the best possible room to execute their focused strategy, which I think they are executing well.”

Market Share

Nokia rose as much as 3.1 percent to 6.245 euros in Helsinki trading and was up 2.2 percent as of 5:20 p.m. Siemens dropped 0.2 percent in Frankfurt trading.

Concluding the Motorola deal may require concessions on either the U.S. or Chinese side, PRTM’s Hays said.

“It’s highly likely the deal will proceed and at worst NSN could be forced to give up the Motorola business in China which is probably a relatively small part of overall revenue,” he said.

The purchase is now in the third phase of the review by the anti-monopoly bureau at China’s Ministry of Commerce, Nokia Siemens said in the statement without specifying when the deal may now be completed.

“It is negative as Nokia will not be able to start reaping synergies before the transaction has been closed,” said Sami Sarkamies, a Helsinki-based analyst at Nordea Bank. Delays are likely to hurt the Motorola unit’s ability to get new sales, he said.

Ericsson AB was the biggest wireless equipment provider in the fourth quarter with a market share of 36.9 percent, compared with 21.4 percent for Nokia Siemens Networks in second place, according to figures from Dell’Oro Group cited by Nokia Siemens. Huawei Technologies Co.’s share was 17.9 percent and Motorola’s was 2.6 percent, according to the figures.

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