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Motorola could make “excess profit” of £1.1 bn from its emergency services contract, the UK’s competition watchdog said.
Motorola Solutions Inc. could make “excess profit” of £1.1 billion ($1.2 billion) from its UK emergency services contract, the country’s competition watchdog said, warning that the government had locked into a monopoly provider.
Motorola Solutions was overcharging the UK’s Home Office for its emergency service radio network, which was ultimately being paid for by taxpayers, the Competition and Markets Authority said Friday. It recommended that price controls be imposed on the telecom network to restrict how much it can charge.
Motorola’s Airwave Network has run the secure mobile system for the UK’s police and ambulance services since 2000. The contract was due to end two years ago, but has been delayed until 2026 or later. The CMA said it was concerned about Motorola’s double role in providing the current network and in helping to deliver the replacement network is partly behind the large profits. Motorola acquired Airwave in 2016, hence the dual role, the CMA added.
“The Home Office and our emergency services are locked in with a monopoly provider which can charge much more than it could in a properly functioning market,” said Martin Coleman, chair of the CMA’s independent inquiry group.
The CMA said the company could make about £1.1 billion ($1.2 billion) in excess profit from operating the network between January 2020 and December 2026. If the delay in rolling out a new network continues, it could make a further £160 million excess profit each year after 2026.
A spokesperson from Motorola Solutions said it “entirely rejects the CMA’s unfounded and incorrect calculation of ‘excess’ profits” and that it “is based on an arbitrary time period of the Airwave project.” Motorola Solutions shares fell as much as 4.2% in US trading on Friday.
The watchdog said the Airwave Network accounts for around 7% of Motorola’s global revenues and about 21% of its pretax profits.
The Home Office did not immediately respond to a request for comment. The CMA will make a final decision later in the year.
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