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HELSINKI (Reuters) - Nokia Siemens Networks' agreed $1.2 billion acquisition of Motorola's telecom network equipment arm has been delayed by the Chinese regulator, which has yet to grant permission for the deal.
The chief executive of Nokia Siemens, Nokia's network gear unit, said he was working closely with the Anti-Monopoly Bureau of the Ministry of Commerce of China to finalize the clearance.
"This delay is disappointing, but we're looking forward to completing the acquisition early in the new year," Nokia Siemens Networks CEO Rajeev Suri said in a statement on Tuesday.
The deal will strengthen Nokia Siemens - a joint venture between Nokia and Germany's Siemens - against its key Chinese rivals, and make it the second-largest mobile telecom gear maker ahead of China's Huawei.
All other regulatory clearances for the deal which will grow Nokia Siemens business in key markets in North America and Japan, have been obtained, Nokia Siemens said.
"Nowadays Chinese approval is a pre-closing condition for many high-tech M&A transactions, and the Chinese Ministry of Commerce has previously shown that it takes its time even after other regulators clear a deal," said Florian Mueller, consultant on competition issues.
"China proved in the Panasonic-Sanyo case that it stood its ground even after a deal had been cleared by the U.S. and the EU, and insisted on additional remedies," Mueller said.
In October 2009 China granted Panasonic Corp anti-monopoly clearance to buy Sanyo Electric Co Ltd subject to conditions, including cutting its stake in a battery venture with Toyota Motor Corp.
Motorola and NSN have had a hard time battling bigger players to win business with large telephone companies in the cut-throat mobile gear market, which is expected by analysts to decline in 2010.
Motorola has only 3 percent share of global mobile network market, but it gives Nokia Siemens relationships with more than 50 telecom operators and to strengthen its position with major carriers like China Mobile, Clearwire, KDDI, Sprint, Verizon Wireless and Vodafone.
Motorola said the delay in unit sale would not impact its ongoing split-up.
"It will not affect the separation of Motorola, which is on schedule for January 4, 2011," said Motorola Solutions spokeswoman Tama Mcwhinney.
In New York Nokia shares were 0.4 percent lower at $10.18 at 1640 GMT, while Motorola 0.1 percent lower at $8.98.
Additional reporting by Yinka Adegoke in New York; Editing by Erica Billingham