Billionaire investor Carl Icahn has increased his holding in Motorola Inc to about 10.4 percent, according to documents the company filed with the U.S. Securities and Exchange Commission.

According to the filing Icahn spent $86.2 million on 11.5 million shares in Motorola this week. Icahn had reported on August 3 that he raised his stake to 9.99 percent since May 7, when he had held 8.75 percent of Motorola's shares.

Motorola is planning to split in two in the first quarter of next year, separating its cellphone and set-top box business from its enterprise mobility business. Last month the company said it was selling its network equipment business.

Pacific Crest analyst James Faucette said Icahn likely expects the handset business to fetch a higher valuation once the company is split in two.

The thesis for him and a lot of other people is if you're able to separate the businesses the stock will be worth more than it is today, Faucette said.

Shares in Motorola were up a penny at $7.51 in morning trade on the New York Stock Exchange.

With Motorola shares at about $7.50, a lot of value-oriented investors feel that the handset business is being valued at somewhere between zero and $1 billion, Faucette said.

Given that Motorola is expected to sell more new phone models in coming months, Faucette said the valuation seems low to some investors, especially when compared with Research In Motion , which has a market capitalization of about $26 billion.

But Faucette noted that it could be hard for Motorola to sustain a strong handset business over the long term because of increasingly tough competition in that market.

Could the handset business be worth more if their new products coming out this fall do well? Absolutely, but it may not in the long run be that much more valuable, Faucette said.

Motorola phones use Google Inc's Android software, helping it compete with rivals such as Apple Inc's iPhone and Research in Motion's BlackBerry.

(Reporting by Sinead Carew; editing by Gerald E. McCormick, Phil Berlowitz)