Having established a ready market for its radio equipment by assiduously building and operating its own networks, Motorola Inc is more than happy to hand on the fruits of its labours to specialists in the field that can exploit them further by combining them with properties outside Motorola’s orbit – in exchange for a significant shareholding in the enlarged operating company. In the latest such deal, it has agreed to sell to abitious Nextel Communications Inc 2,500 mobile radio licences and other properties in 21 US states from Motorola for up to $1,800m in new Nextel shares. The systems are presently used for taxi and truck dispatching services, but Nextel wants to exploit them further by adding cellular-quality telephony using Motorola equipment, and data transmission services. The price translates into a 20% stake in Rutherford, New Jersey-based Nextel, which has spent more than $1,000m in recent weeks to buy dispatch services around the country, and now holds licences covering the 10 largest metropolitan areas in the US, including New York, Los Angeles, San Francisco and Chicago – and 180m total population.Despite getting up to $500m in financing from Motorola as well as the licences, Nextel reckons it will need more than $1,000m all told over the next two years to finance the completion of its expanding network.
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