Will Moto-NSN Deal Reopen the Set-Top Doors?
Under the deal announced today, NSN will put up $1.2 billion in cash for much of Motorola's wireless infrastructure business. Motorola will hold onto substantially all of its related patents, licensing them to NSN. (See NSN to Buy Moto's Wireless Biz for $1.2B and NSN Expands in North America With Moto Buyout.)
It stands to reason that Motorola could craft a similar deal if it ends up selling its set-top and broadband consumer premises equipment (CPE) assets.
"If they could do it with one part of the business, why can't they do it with another?" asks Alan Breznick, senior analyst with Heavy Reading. "It could set a model for doing it, in fact."
And that model might be Huawei's best hope for landing Moto's set-top business.
The possibility arose in November, well before Motorola decided to split into two companies, when rumors swirled that the company was interested in shedding its set-top division. China's Huawei was viewed as a lead candidate, along with Ericsson AB (Nasdaq: ERIC), Microsoft Corp. (Nasdaq: MSFT), and NSN. (See Huawei Seen as Likely Moto Suitor and Moto Wants to Do the Splits .)
Huawei certainly has the cash to pull the deal off, and perhaps the motivation, too. It's been craving a big piece of the US set-top market, and buying Motorola's set-top assets would automatically put it in the catbird's seat in North America. Huawei has struggled to break into that market on its own, though it has managed to win a Digital Terminal Adapter (DTA) supply deal with Suddenlink Communications , with Mediacom Communications Corp. conducting some DTA tests. An industry source said Huawei is also eager to compete in the Docsis modem and gateway market, another one in which Motorola is already deeply entrenched. (See Huawei DTAs Break In at Suddenlink and Huawei Breaks US Set-Top Seal .)
Plus it's not exactly a secret that Huawei is interested in obtaining some North American assets to help its cause in the region, notes Catharine Trebnick, an analyst with Avian Securities LLC .
But there's the trust factor to consider. Would the US allow a deal that would give Huawei, not just the set-top assets, but the conditional access systems and the other keys to the Motorola set-top castle?
Huawei appears to be addressing some of those fears. It hired John Bellinger, a partner at Arnold & Porter and a former George W. Bush administration official, to help relieve concerns about the vendor's ties to the Chinese military as it mulled a bid for a piece of Motorola. In April, there were reports that Huawei was negotiating a "mitigation agreement" with the US government that would be similar to the one that cleared Alcatel's 2006 purchase of Lucent.
Huawei might be able to circumvent some of those concerns if Motorola is willing to mimic parts of the NSN agreement and ensure that the bulk of its set-top-related IPR remains in Motorola's hands.
— Jeff Baumgartner, Site Editor, Light Reading Cable