MSI Motorola Solutions Inc

A German Newspaper Capital recently reported that Nokia Siemens Networks (NSN), a 50-50 joint venture between Nokia Corp. (NOK) and Siemens AG (SI), desperately needed at least Euro 1 billion from its parent companies to complete its proposed business restructuring. Capital also reported that NSN is trying hard to issue a high-yield bond of Euro 2 billion in the next 3-4 months for replacing its existing credit facility, which will expire in June 2012.

In July 2011, NSN abandoned its equity disinvestment plan at least for the time being. For the last 12 months, NSN was looking for a third party investor in order to inject funds, thereby reducing the stake of both Nokia and Siemens. Two major U.S. private equity groups, Kohlberg Kravis Roberts and TPG, have backed out from their bidding for a significant stake in NSN. The departure of these two private equity groups primarily resulted from the disagreement between the firms and NSN over price and controlling stake in the venture.

Ever since its formation, NSN is struggling to achieve profitability. There are mainly three reasons for this dismal situation: (1) the company is a marginal player in the lucrative North American CDMA markets. NSN is suffering from strong CDMA foothold (2) ongoing global economic fluctuations (3) massive competitive threat from low-cost Chinese competitors, such as Huawei Technologies and ZTE.

Recently, NSN suffered a massive blow. On July 29, the upcoming wholesale 4G LTE wireless network operator LightSquared announced that it has decided to outsource a majority of its network to Sprint Nextel Corp. (S) instead of NSN. The deal between NSN and LightSquared was first announced in July 20, 2010. The 8-year agreement, valued at more than $7 billion, was considered the biggest ever wireless network infrastructure contract throughout the world.

After acquiring the wireless network infrastructure assets of Motorola Solutions Inc. (MSI) in April 2011, NSN was desperately looking for a foothold in the lucrative North American markets, which is its weakest spot. However, the company faced two major blows within the next 4 months. In addition to the LightSquared setback, if the proposed merger of AT&T (T) and T-Mobile USA get regulatory approval, NSN may lose its largest customer in North America, T-Mobile USA.

 
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