News Dec 07, 2015 08:07 AM EST

Motorola Solutions Acquires Airwave for $1.2 Billion

By Staff Writer

Motorola Solutions Inc. has reached an agreement to purchase UK-based communication company Airwave Solutions Ltd. The deal will expand its support and service business, as Airwave is already using Motorola's technology for its network service.

According to Reuters, Motorola Solutions Inc. said it would buy UK-based communications company Airwave Solutions Ltd. in a $1.2 billion deal to beef up its services business. In order to fund the deal, Motorola plans to use bank financing and cash on hand.

Airwave Solutions Ltd. is the operator of Airwave network, a mobile communications network for Britain's emergency and public service. The company is owned by Australia's Macquarie Group Ltd., and provide data and voice communication to more than 300 agencies in Britain.

Airwave is not a stranger to Motorola and its technology. The technology Airwave usefor their communication network is TETRA (Terestrial Trunked Radio), a Motorola-owned technology. Motorola also operates and manages similar technology in United States, Australia and several European countries such as Norway, Denmark and Austria. TETRA has become European standard for radio communication since 1995.

As Bloomberg reported, current TETRA technology which Airwave use will be obsolete in the next 10 years. Meanwhile Motorola has already invented and deployed the latest TETRA communication system, and it will replace the older TETRA networks all around the world. Kurt Ebenhoch, a Motorola Solutions spokesman said,"New networks with this technology continue to be deployed, most recently in Norway."

Motorola Solutions is a successor of Motorola Inc that was defunct in 2011 after Google acquired its mobile division. Later on in 2014, Google sold it to Lenovo, the Chinese computer giant. After the acquisition, Motorola Inc. was split into two separate entities: Motorola Mobility and Motorola Solutions.

Motorola Mobility as a subsidiary of Lenovo is producing consumer-oriented product lines such as smartphone, cable modems and set-top boxes for cable television. While Motorola Solutions as the legal successor of Motorola is providing telecommunication service and product for government and public sectors. 

Daily Mail reported that Motorola Solutions is trying to strengthen its service business, which provides communication services to government, business and public service agencies. Previously, government agencies including police and fire department cut their budget for purchasing telecommunication equipment, resulting a drop in revenue for Motorola. Therefore, purchasing Airwave is necessary to drive company's growth.

Shares of Motorola were up to 3.4% in extended trading to $73.50 on Thursday. This topped its 52-week-high of $72.97 set during regular trading last month, on November 19. In the entire 2015, Motorola shares has climbed 6%.

The deal will strengthen Motorola position in mobile communication service which has always been its strongest suit.

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