Here is the WSJ Report:
By QUENTIN HARDY
Staff Reporter of THE WALL STREET JOURNAL
Motorola Inc. is expected to win a potentially significant digital cellular telephone contract from a group of Japanese cellular telephone providers. The full size of the nationwide infrastructure contract isn't known, though people familiar with the contract said it could be worth several billion dollars over its multiyear life. Motorola has scheduled a news conference for Wednesday to announce the deal.
Japanese participants include DDI Corp., which already operates Motorola's digital and analog cellular networks over much of Japan.Motorola equipment is also used by Nippon Idou Tsushin Corp., or IDO. Japanese press reports have said DDI and IDO are discussing a joint operating arrangement, but so far the two haven't announced a tie-up.
The proposed digital network works on a standard known as code-division multiple access, or CDMA, which involves tricky
engineering, but may dramatically increase the number of callers
that can be fit onto a slice of radio spectrum. Japanese companies
have been adding cellular customers at a rate of over one million a
month, and are keen to build up carrying capacity on their increasingly overtaxed networks.
The technology could likely be deployed quickly, if the operators choose to build their system over their existing Motorola infrastructure, a technique that has been used elsewhere. If so, the switches for the system will likely be manufactured by DSC
Communications Corp., Motorola's usual partner for switching
technology. The contract would be a huge victory for Motorola,
which has bet big on CDMA to bring the company back to a high
rate of growth. In 1996, Motorola, based in Schaumburg, Ill., had
revenue growth of just 3%, to $28 billion, compared with a growth
rate of 22% the year before.
So far the electronics and communications company has had a checkered history with CDMA. The technology was slow to market, but is now being widely deployed in the U.S. and an increasing number of overseas markets.
In January 1996, Motorola chose not to participate in Sprint PCS's $3 billion contract across the U.S., citing disagreements over financing, but since then the company has racked up several important CDMA contracts in overseas markets. Sprint PCS is a
wireless venture of Sprint Corp., Tele-Communications Inc. and Cox
Communications Inc.
Separately, Motorola won a pair of digital wireless contracts in South Korea valued at about a total of $160 million.
One contract, involving Motorola and Daewoo Telecom Ltd., is to deploy a CDMA network in Seoul. The contract, awarded by Korea Telecom Freetel, is valued at $180 million, two-thirds of which will go to Motorola, a Motorola spokeswoman said. Deployment is
scheduled for early 1998.
The other South Korea award, valued at $40 million, is for Motorola's digital radio technology, called iden, and is designed to be used by the transportation industry and by mobile work groups.
The contract was awarded by LG Electronics Inc. The technology, used in the U.S. by Nextel Communications Inc., also has been deployed in eight other countries.
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