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How Will Motorola’s Airwave Acquisition Help?

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Jul. 26 2016, Updated 10:09 a.m. ET

Airwave increases recurring revenue streams by 50%

Earlier this year, Motorola Solutions (MSI) announced that it completed its acquisition of Airwave. Airwave is the largest operator of public safety networks in the world. According to the CEO and Chairman of MSI, Greg Brown, this acquisition will enable Motorola to significantly grow its managed and support services business.

Brown stated that the Airwave acquisition also reflected the firms’ commitment to public safety users in the United Kingdom. Brown further said, “The combination of our years of experience as a trusted global leader in mission-critical communications and Airwave’s proven service delivery platform will provide Great Britain with innovative emergency services technology that enhances public safety today and into the future.”

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As the chart above shows, Motorola can leverage Airwave’s managed service infrastructure, contact center, and operational assets beyond the United Kingdom (EWU). This acquisition also increases recurring revenue streams by 50% and provides geographic diversification and additional smart public safety applications.

Acquisition details

Motorola purchased Airwave on a debt-free basis with a net cash payment of ~$1 billion. Also, it will make a deferred cash payment of $90 million in November 2018.

The acquisition is expected to be accretive to EPS (earnings per share) and free cash flow in calendar 2016. It might also add $450 million in revenues in 2016.

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