Huawei snaps up Europe's largest LTE deal
Published: 9 November, 2009
Huawei has been making strong progress in the first phase of LTE trials in Europe, with tests at TeliaSonera, Telenor and Vodafone Germany. Now it has converted the Telenor trial to a commercial deal, which sees the Norwegian cellco snubbing its incumbent suppliers Ericsson and Nokia Siemens, and awarding a six-year, €170m deal to the Chinese supplier.
This is the largest LTE plan in Europe to date, and the first fully commercial one. Telenor will take an overlay approach, which should reduce some cost by harnessing existing sites and infrastructure. And it is not just upgrading hardware, but taking the opportunity for a wholesale migration of its cellular network to digital IP. It will gradually integrate its existing network equipment into the new converged system provided by Huawei on the RAN side and Starent (soon to be acquired by Cisco) at the core. The contract will also include the delivery of new 2G and 3G base stations across various bands, with all generations of wireless technology moved to a unified packet core from Starent (an approach also being planned by carriers as diverse as China Mobile and KDDI).
Ragnar Kaarhus, head of Telenor Norway, told the London Financial Times that the project would be the biggest mobile network upgrade ever undertaken in Norway. He said the economic benefits of moving to a combined infrastructure were very clear, and expects to halve operating costs once the new network is in place. "It remains to be seen how aggressively we will build out the network and provide new services," commented CTO Rolv-Erik Spilling.
Ericsson's share price fell 3% last week, partly because of the contract loss, though analysts said this would hit the Swedish vendor more in psychological terms than monetary ones. This may be partly because Huawei's ability to price keenly, and offer vendor financing, are expected to have played a role in its success - Kaarhus attributed it to the vendor's "combination of technical quality, in terms of handling a large scale equipment replacement operation, and commercial terms".