Acquisition increases MSI’s revenue stream
A few months back, Motorola Solutions (MSI) announced that it had completed the acquisition of Airwave, 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 grow its managed and support services business significantly.
As the chart below shows, this acquisition is expected to be accretive to EPS (earnings per share) and FCF (free cash flow) per share in 2016. Revenues are expected to rise by $450 million in 2016 as well.
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.
Services revenue rose in 2Q16
Driven by its acquisition of Airwave, revenues from MSI’s Services segment rose 26% YoY (year-over-year) in 2Q16, from $501 million in 2Q15 to $629 million in 2Q16.
MSI CEO Greg Brown stated the following: “Our managed and support services business grew 4% organically and we’re proceeding full steam ahead with the integration of Airwave after recently receiving unconditional clearance from the UK Competition and Markets Authority just a few weeks ago.”
Motorola purchased Airwave on a debt-free basis with a net cash payment of ~$1 billion. It will also make a deferred cash payment of $90 million in November 2018.