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As part of the planned breakup of the company, telecom equipment maker Motorola (MOT) has agreed to sell the majority of its wireless infrastructure assets to competitor Nokia Siemens Networks, a joint venture between Nokia (NOK) and Siemens (SI). The $1.2 billion cash transaction is expected to be completed by the end of 2010, pending the necessary approvals. The business had $3.7 billion in sales (17% of the total) last year, the majority of which came from legacy GSM and CDMA products. However, it was also a leading supplier of next generation 4G WiMAX and LTE technologies. The deal would make Nokia the number three supplier of wireless infrastructure devices in North America (two spots above its current position) and the number two vendor worldwide, behind Ericsson (ERIC) and Huawei.

The primary draw for Nokia is gaining MOT's incumbent relationships with major cellular services providers like Verizon (VZ - Free Analyst Report), Sprint (S), Vodafone (VOD), and China Mobile (CHL). Nokia management said it expects to keep all 7,500 Motorola employees on board, since the transaction is more about adding customers and realizing revenue synergies than cutting costs.

In addition to the cash, Motorola will hold onto $150 million in receivables, the iDEN infrastructure business (supplier for Sprint Nextel's push-to-talk network), and the entire intellectual property portfolio (all patent related revenues from NOK were included in the transaction price). We believe that after the sale is complete, the remaining business should fetch a richer valuation as a pureplay enterprise mobility computing company, assuming it is successfully split from the handset and set-top box businesses in the first quarter of 2011.