NSN wins Chinese contracts worth over $1bn

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NSN wins Chinese contracts worth over $1bn

By CAROLINE GABRIEL

Published: 26 February, 2009

READ MORE: Nokia Siemens Networks

Ericsson and Alcatel-Lucent did not have long to crow over their LTE victory at Verizon, in which Nokia Siemens only won the IMS portion. The second placed vendor has bounced back with Chinese contracts totalling €880m ($1.12bn), calming fears that the bulk of the Chinese capex windfall of 2009-2010 would go to local vendors Huawei and ZTE.

NSN's has two new deals. The first is a W-CDMA order from China Unicom, which is building out 3G this year along with CDMA-based rival China Telecom and market leader China Mobile, which uses the homegrown TD-SCDMA standard. The second is from China Mobile, for a mixture of TD-SCDMA and GSM gear.

The Unicom contract covers 11 provinces which are to be built out this year. NSN has not revealed the relative value of the two deals, but its portion of the Unicom build-out is still likely to be far smaller than Ericsson's. The Swedish leader said last week that it had won about 30% of the Unicom contract for 3G, which is likely to be worth about $2.6bn. The W-CDMA carrier plans to deploy 3G in 282 cities this year, at a cost of about $8.8bn. Most analysts expect Ericsson and Huawei to get the bulk of any further contracts this year, which could leave NSN's share capped at only about 6%. However, it is still a valuable foothold in a customer that will expand 3G further in the next few years and may also plan a relatively early move to LTE, if Chinese authorities allow.

NSN has invested heavily in making itself ready for the Chinese opportunity, which could amount to capex of $29bn this year alone. It has six R&D centers in the country and has worked with local partners on building up TD-SCDMA expertise.

Meanwhile Nortel, which could also hope for Chinese business, especially from CDMA-based China Telecom, clearly has major problems in winning large deals while it remains in bankruptcy protection with its future uncertain. The company announced yesterday that it would reduce its workforce by an additional 3,200 positions as it tries to get the company back into shape for turnaround, sale or break-up. This figure comes on top of 1,800 jobs that still remain to be axed as a result of previous restructuring programs. In a statement, CEO Mike Zafirovski said: "Tough decisions are being made to restructure the company and work towards a successful emergence from creditor protection."