Motorola Solutions’ decision to acquire Airwave is ‘good news’, the latter’s chief executive officer Richard Bobbett told Wireless in an interview this morning (4 December 2015). ‘We are very positive about this,’ he said.
Motorola announced last night (3 December 2015) that it is to acquire the UK’s emergency services communications network and services provider for £817.5 million (approximately $1.2 billion). Airwave is a dedicated, highly-resilient communications network using the TETRA two-way radio standard for use by Britain's 300,000-plus emergency services frontline personnel, such as police officers, paramedics and fire fighters.
The move was welcomed by Airwave and its staff, as it will help to secure the company’s longer term future. Airwave, which designed, built and continues to operate the UK’s emergency services communications network, is due to see its last contracts with police, fire and ambulance services expire in 2020.
In the worst case scenario for the company prior to the Motorola deal, if it was unable to secure other work outside of the public safety sector, then it would most likely have had to close down in 2020. The purchase by Motorola, if it is approved by the expected date of end of Q1 2016, will give the company another lease of life.
‘Motorola Solutions has a huge history in public safety and a lot of the infrastructure products we use have been supplied by them,’ said Bobbett. ‘Motorola is definitely the world’s leading manufacturing, services and product company in mission critical communications and Airwave is the world’s leading public safety network services manager.
‘Managed services is core to Motorola’s strategy, so buying Airwave hits the sweet spot for them; who better than Airwave to help them take that strategy forward?’ said Bobbett. ‘From a customer perspective, bringing together the knowledge, skills and capabilities of both Airwave and Motorola will allow us to offer a very strong proposition for customers going forward.’
He added that the purchase is good news for Airwave staff as it will ensure growth for the company. Motorola has 600 staff and as one commentator put it to Wireless: ‘Airwave has a great team of people, and this is shown by their loyalty and passion in the successful day to day running of the network and service.’
The move has been welcomed by Prospect, the union for managers and professionals in the communications, media and digital sectors, and a recognised union at Airwave. Parmjit Dhanda, Prospect negotiator, said: ‘After months of uncertainty and speculation about Airwave's future, Prospect members will welcome this announcement and the stability we hope it will bring to the company.
‘It creates an opportunity for Airwave to grow in European and US markets, as a wholly owned subsidiary of Motorola. We look forward to working with Airwave's senior management, and with Motorola, to ensure that our highly-skilled members' terms and conditions are respected.'
Bobbett said that Airwave’s stakeholders were on side and had voted for the deal. Airwave is a profitable company in itself. The company’s debt, believed to be around £1 billion accruing from the funding it had to raise to design and build the TETRA network, is held by its owner Guardian Digital Communications Ltd (GDCL), which in turn is wholly owned by the Australian investment firm Macquarie Group’s Macquarie European Infrastructure Fund 2.
‘It is a clean transaction and Airwave has no debt today, as this will extinguish the debt,’ said Bobbett. As to what happens to the Airwave senior management and whether there will be any redundancies, Bobbett said: ‘We are at a very early stage. We only announced the acquisition today, so it is not complete and we are some way away from completing the transaction and bringing the two organisations together. There is a lot more detail and planning to take place yet.’
He continued: ‘The reason for doing this is to enable Motorola to grow its managed services business, so overall I think it will be positive for staff. That doesn’t mean there won’t be change, but changes happen all the time in any organisation. I don’t think it will be negative though and it is a chance for Airwave staff to contribute to the Motorola business.
‘Kelly Mark (Corporate Vice President – Strategy, Motorola) and I have just come off an all hands call with the Airwave staff and I can say that there is without doubt a real positivity among the staff and the place is buzzing; they are excited about the future opportunity.
‘I think people can see that bringing the two companies together provides a real opportunity with new technologies coming to the market, so they can see opportunities to serve customers in the UK and elsewhere. Communications is an exciting place to be in today’s world,’ Bobbett argued.
Earlier this year in an interview with Wireless, Bobbett outlined some of the emerging markets, such as M2M/IoT, managed services and rural broadband, that Airwave is looking at. Is Motorola interested in pursuing any of these opportunities?
‘I can’t comment yet on what Motorola might want to do with Airwave besides the public safety sector. But they see our applications like our Pronto suite of digital services and Airwave Insight products for managing networks and resources, and they see they can add real value to Motorola going forward. But it is too early to talk about emerging market areas yet,’ said Bobbett.
He added: ‘But there is a clear value to be had in our assets and that includes our infrastructure. There are many ways to exploit the value of our infrastructure moving forward and I would expect any sensible owner to want to exploit that, but I can’t comment on anything specific.’
One complication is that on Monday 23 November 2015 Airwave filed an objection to the Home Office’s decision to award the Lot 3 main area network contract of the proposed Emergency Services Network (which will replace Airwave starting from mid-2017) to UK mobile operator EE. Motorola Solutions is preferred bidder for Lot 2 of ESN and will have to work with EE to deliver a 4G network and services to the emergency services.
Airwave has filed the complaint in the Technology and Construction Court on the grounds that it does ‘not believe that bidders, including Airwave, were given equal treatment under relevant procurement laws and we have therefore made a claim in order to protect our position for any loss suffered’.
The Home Office has said it will contest this challenge and will also be seeking damages to protect it from any delay costs to ESN as a result of the challenge. Bobbett said that Motorola’s decision to buy Airwave will not affect this. ‘Until completion of the deal, the Airwave board will take any steps to protect the company.’
Next week on 8 and 9 December, the Court will hold a hearing into the automatic suspension of the procurement procedure, which if granted will hold up the contract. This is not at Airwave’s request, but something that happens automatically under EU procurement regulations when a contract award is challenged. The assumption is the Court will look at the merits of Airwave’s claim at a later date.
Motorola Solutions buys UK emergency services comms provider Airwave
Airwave issues claim against the Home Office over ESN procurement process
What’s next for Airwave?