Motorola Wins First LTE Contract

Motorola (MOT - Analyst Report) recently announced that its Home & Network Mobility business unit was selected as a key development partner of KDDI Corp.’s next-generation LTE (Long Term Evolution) network. This is Motorola’s first public order for LTE technology. KDDI is the second-largest wireless service provider in Japan.

Motorola will implement the basic RAN (Radio Access Network) infrastructure and base stations for the KDDI’s LTE network. Although financial terms of the deal were not disclosed, we believe that the contract size may exceed $1 billion. Earlier, KDDI had estimated spending about $5.3 billion for installing a countrywide LTE network.

KDDI is expected to launch its LTE service in December 2012. The Japanese wireless market is quickly gaining maturity. KDDI faces stiff competition from wireless giant NTT DoCoMo (DCM - Analyst Report) and Softbank Corp. NTT DoCoMo will launch its LTE service by end of 2010.

In order to remain competitive, KDDI is beginning to implement high-speed technology. Motorola shares a long-standing business relationship with the company. KDDI developed its existing CDMA network using Motorola’s technical solutions. Besides Motorola, it has also chosen Japan’s NEC Corp. as a supplier of LTE equipments.

LTE is the most sought after next-generation (4G) wireless network standard in the market. The 4G wireless networks are aiming to cope with substantial demand for high-speed wireless data services and mobile video.

LTE provides downlink and uplink peak rates of 100 Mbit/s and 50 Mbit/s, respectively, with RAN round-trip times of less than 10ms. The technology also supports flexible carrier bandwidth and both FDD (frequency division duplexing) and TDD (time division duplexing) on the same platform.

Motorola’s end-to-end LTE solution is based on its OFDM (Orthogonal Frequency Division Multiplexing) and selective radio options including MIMO (Multi-input Multi-Output) technologies.

Together with core infrastructure implementation, the company also offers network management solutions and professional services. Motorola is also conducting trial runs for China Mobile Ltd.’s (CHL - Analyst Report) LTE network. We maintain Neutral recommendation on Motorola.