Motorola Pays $1.2B for UK Public-Safety Operator
Motorola Solutions will pay £817.5 million (US$1.2 billion) for Airwave, a UK public-safety network operator, in a move it says will strengthen its global managed-services business.
The two companies were said to have entered into talks over a possible deal in August. The US equipment maker appears to have been undeterred by the current turmoil in the UK's public-safety communications market, with authorities keen to phase out the TETRA technology that Airwave uses and replace it with a more up-to-date 4G system.
AirWave Wireless Inc. 's TETRA network is based on Motorola Solutions Inc. (NYSE: MSI)'s technology and supports communications for more than 300 emergency and public-service agencies throughout the UK.
A 4G-based service would give the police and other agencies additional capabilities, however. In October, the government awarded a contract to EE , the country's biggest mobile network operator, to develop a service based on LTE technology.
Airwave had also been in the running for that contract but its bid was rejected earlier this year, leaving the operator at risk of being replaced by EE entirely.
Desperate to prevent that from happening, Airwave issued a legal challenge to the government last week, claiming that it did not receive fair treatment during the bidding process.
"We do not believe that bidders, including Airwave, were given equal treatment under relevant procurement laws and we have therefore made a claim in order to protect our position for any loss suffered," the company is reported to have said in a statement.
Given the upheaval, Airwave's TETRA technology may be in use for several years to come and Motorola is likely to have calculated that it can generate enough revenues over that period to justify the takeover fee, according to Gabriel Brown, a senior analyst with Heavy Reading .
But Motorola will also be hoping to position itself for a future upgrade of the UK's public-safety network, says Brown, with authorities ultimately determined to make use of more sophisticated network technologies than TETRA.
Light Reading approached Motorola for a comment on its takeover motives but had not heard back by the time this story was published.
In a statement, Motorola said its net cash payment to investment fund Macquarie, the current owner of Airwave, would be about £700 million ($1.1 billion), after taking into account purchase price adjustments and cash in the business.
The deal for Airwave, which currently has about 600 employees, is expected to close in the first quarter of 2016.
Motorola is already one of the world's biggest operators of public-safety systems and currently manages networks in Australia, Austria, Denmark, Norway and the US.
The announcement of the move for Airwave came at the same time that Motorola said it had finished deploying a nationwide TETRA network in Norway. Interestingly, in its statement about the Norway network, Motorola flagged the readiness of the system for "public-safety broadband bearers, such as LTE."
Nevertheless, the overhaul of public-safety networks worldwide could pose a threat to Motorola as 4G incumbents and startups look to capture a slice of the action.
Core Network Dynamics GmbH , a German SDN and NFV startup, is touting its ability to put an entire core network on a Raspberry Pi -- a single-board computer about the size of a credit card -- as a massive opportunity for governments to overhaul public-safety networks at a fraction of the cost it would take to roll out conventional 4G infrastructure. (See NFV Startup Could Challenge Incumbents .)
CND already claims to be working with one European government on the deployment of a public-safety network.
— Iain Morris, , News Editor, Light Reading