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Huawei ousts Ericsson in Denmark's TDC

Chinese company to modernize and manage network in $700m deal, operator says security processes could be blueprint for others

By CAROLINE GABRIEL

Published: 28 October, 2013

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With Huawei still effectively excluded from telecoms infrastructure business in North America and some other key markets, it will become increasingly dependent on Europe for growth outside its home country. Despite some countries raising security concerns, and the European Commission probe into dumping allegations, Huawei has carved out a significant role among Europe's cellcos, especially for network modernization projects.

It won the most recent of these in Denmark, where TDC has named it the sole supplier for a €500m ($700m) project to upgrade and manage its network across the country. The deal is a blow for Ericsson, which has managed TDC's network since 2008.


TDC will replace its existing equipment with Huawei gear which will support LTE as well as GSM and W-CDMA. The management of the upgrade network will also be handled by Huawei, with a gradual handover period as it updates the infrastructure. Huawei will allocate 250 staff for TDC and the deal will create 100 new jobs in Denmark.

"This partnership for TDC is the most critical relationship we have made with a vendor and this has been, and will be, the biggest decision I've made as a CEO," TDC CEO Carsten Dilling told a media briefing in Shenzhen.

Dilling emphasized the performance advantages and network experience which he said Huawei offered, saying the supplier had committed to ensure that "TDC will always have a network that outperform those of competitors, with the best user experience and the best network performance." In an apparent swipe at the incumbent supplier, he said Huawei's products would "match the leader of the world" and praised the Chinese company for focusing on customer experience rather than traditional RAN metrics when assessing performance.

Of course, Huawei has traditionally been associated with winning contracts on price, and it has certainly been scoring highly in European modernization programs, which focus on 4G overlays and coverage improvements rather than capacity, and are highly price sensitive. Ericsson has complained that the European focus on modernization, rather than capacity upgrades, hit its profits, especially in 2012, though in its most recent quarter it said the tide was turning towards capacity.

The other issue always raised about Huawei is national security, with these concerns being the official reason for its exclusion from major contracts in the US and other major markets like India. Interestingly, TDC's Dilling said the approach it was taking, with close and ongoing involvement of intelligence agencies, could be a blueprint for Huawei to work with other operators in future.

As Telecoms Europe reports, he said there had been close cooperation with Danish government authorities and intelligence bodies. He said: "On the TDC side, we feel that we learned a lot by having the intelligence agencies in and we will keep them in as we are running this partnership." This could be a "showcase for the rest of Europe and worldwide" in terms of how to manage critical infrastructure contracts in a secure way, he suggested, adding: "For Huawei, that can be an extreme interesting case."

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