Nokia's network gear arm Nokia Siemens Networks has delayed its agreed $1.2 billion acquisition of Motorola's telecom network equipment arm, citing pending permission from the Chinese regulator.

The deal will strengthen Nokia Siemens against its key Chinese rivals, and make it the second-largest mobile telecom gear maker ahead of China's Huawei.

This delay is disappointing, but we're looking forward to completing the acquisition early in the new year, Rajeev Suri, chief executive officer of Nokia Siemens Networks, said in a statement on Tuesday.

The joint venture between Nokia and Germany's Siemens unveiled the deal -- aimed at growing its business in markets such as Japan and North America -- in July 2010.

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.

Nokia Siemens Networks expects the deal to give it 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.

(Reporting by Tarmo Virki; Editing by Erica Billingham)