Motorola thrown a $700m lifeline

Motorola has won a $700m deal with 3G licence holder Hutchison Whampoa to provide it with next generation mobile handsets.

The deal comes just a day after the telecoms equipment manufacturer announced a £130m contract with BT Cellnet to expand its existing UK mobile infrastructure.

Today's agreement will see Motorola become a preferred supplier in many of Hutchison's target markets for 3G, including Italy, Sweden and the UK. It will run until at least 2003, with the first handsets to be delivered in the second half of 2002.

The devices will be designed to support "multimedia capabilities" - the applications upon which the success of 3G will be based.

In a statement, the company said users could expect to see live news broadcasts, music on-demand, multimedia messaging and interactive games, among other location-based services on the devices.

The deal is a welcome boost for Motorola, which has struggled recently in the gruelling market for telecoms equipment providers. Last quarter it reported its first loss in 15 years and was forced to lay off 22,000 workers.

The deal will also start to outline the likely final costs of rolling out 3G networks and services, for which firms like Hutchison Whampoa have already paid billions in licence fees.

The deal with Motorola does not include network infrastructure costs. Mike Zafirovski, president of Motorola's personal communications sector, said the deal reflected the change in business models the wireless industry will need to cope with.

Motorola is due to publish its quarterly results tomorrow and is expected to report another loss.