Telecoms equipment company Motorola Solutions entered talks with the UK Home Office to terminate its contract for the country’s Emergency Services Network (ESN), following a review of the future potential of its involvement in the project.
In an earnings statement, Motorola explained it took a strategic decision to begin negotiations regarding an early exit from its ESN commitments.
Motorola stated it believed “the future service potential of the assets is limited”.
As a result of the move, it has already recognised a fixed impairment loss of $147 million related to assets constructed and used in the deployment of the ESN contract.
Motorola and operator EE won a contract from the UK government in 2015 to provide 4G for the country’s ESN and implement a new network to replace the existing two-way radio system run by Airwave, bought by Motorola in the same year.
The upgrade was meant to be completed in 2020 but has been delayed for years due to escalating costs escalating and numerous other issues.
Motorola’s decision to abandon the contract comes a few weeks after a revelation it was facing scrutiny from the UK’s Competition and Markets Authority (CMA), which stated it would introduce price controls over how much the US company could charge the government for running the network.
The CMA believes a lack of competition meant Motorola was making £160 million per year in excess profits, amounting to a potential £1.1 billion over a six year period to 2026.
This level of profit, CMA stated, is over and above “what would be expected in a well-functioning market”.