IDG News Service — Nokia Siemens Networks' acquisition of most of Motorola's (MOT) cellular networks business may be the last move in a long game of consolidation in the industry, which has been hammered by price pressures.

The European joint venture, which itself was formed just three years ago, announced on Monday it would buy the bulk of Motorola's wireless network infrastructure assets for approximately US$1.2 billion in cash. The acquisition includes operations that supply carriers around the world with cellular networks of all kinds and had sales of $3.7 billion in 2009. Motorola will retain most of its intellectual property, as well as its business making equipment for the iDEN network used by Sprint Nextel (S).

After the close of the deal, expected by the end of this year, Nokia Siemens, also called NSN, expects to advance from the fifth-largest to the third-largest vendor in North America. It also expects to become the largest foreign supplier of cellular infrastructure equipment in Japan as it takes over Motorola's supplier relationship with carrier KDDI.

"This deal is about customers," NSN CEO Rajeev Suri said on a conference call following the announcement. It will bring NSN supplier relationships with 50 more carriers and strengthen its relationships with Verizon Wireless, China Mobile and Vodafone (VOD), among others, the company said. NSN expects the new business to be profitable.

The mobile network equipment business has been consolidating for several years as carriers themselves have combined, seeking greater scale to compete in a cutthroat consumer business. The trend has accelerated in the wake of massive investments in 3G (third-generation) networks, before the 4G market has quite gotten off the ground, according to analyst Peter Jarich of Current Analysis. The growing reach of Chinese vendors, such as Huawei and ZTE, has also driven prices down, encouraging network vendors to get bigger and spread out their costs, analysts said.

"It's tough if you're not big," Jarich said. Motorola suffered from this problem, still trying to compete in the alphabet soup of cellular standards: GSM (Global System for Mobile Communications), CDMA (Code-Division Multiple Access), Wideband CDMA, WiMax and LTE (Long-Term Evolution). Keeping up with each generation of technology requires significant research and development resources, which favors the biggest global players, he said.

In addition to Nokia and Siemens merging their network infrastructure businesses in 2007, in the past decade Alcatel and Lucent have combined and Nortel Networks has sold off its wireless gear divisions, mostly to Ericsson (ERIC). But the latest transaction may be the last, at least for a while.

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