Nokia Siemens buys Motorola network operations for $1.2 billion

Nokia Siemens Networks will buy Motorola's telecom network equipment business for $1.2 billion, in an effort to add new customers in markets such as Japan and North America where it has been seeking growth.

The idea is that a bigger Nokia Siemens Networks -- a venture of Nokia and Siemens -- would compete better than either company could have alone against rivals Sweden's Ericsson, China's Huawei and France's Alcatel-Lucent. Motorola and NSN have had a hard time battling bigger players to win business with large telephone companies in the cut-throat mobile gear market, which is expected by analysts to decline this year.

Under the deal, Motorola, which brought in $3.7 billion revenue from network equipment last year, will still keep its network technology patents, which Nokia Siemens can use through a cross-licensing agreement. Motorola will also keep its i-Den network gear business that supports an older Sprint Nextel network and brought in roughly $400 million of its 2009 network revenue.

After the deal, which is expected to close later this year, Motorola plans to split into two entities, one of which will include its mobile phone and set-top box business. The other business, which was previously to include network equipment, will now focus entirely on selling wireless technology to companies and clients such as public safety organizations.