Ericsson's Big Wins in China

L.M. Ericsson (ERIC - Analyst Report), the global leader in telecom infrastructure equipment and technology solutions, today won two major contracts in China, together valued at $1.7 billion. Ericsson has entered into 2G/3G framework agreements with both China Mobile (CHL - Analyst Report) and China Unicom (CHU - Analyst Report), the two larger telecom operators in the country.

Under this agreement, both telecom operators will be able to improve the capacity and performance of their 2G networks and accelerate the initial build-up of their 3G networks. China Mobile and China Unicom served more than 620 million mobile subscribers in China, which is just a shade over 40% of the total Chinese population.

The contract size of the China Mobile deal is of $1 billion. Ericsson will provide solutions for China Mobile’s network energy optimization and CO2 emission reduction target in addition to expanding the carrier’s GSM/GPRS network coverage and capacity in 18 provinces.

The contract size of the China Unicom deal is $700 million. Ericsson will upgrade China Unicom’s GSM network in 10 provinces and also provide the GSM/WCDMA core network and wireless access systems in 15 provinces.

Recently, Ericsson also received fiber-to-the home (FTTH) equipment contracts from three major Chinese telecom operators, viz, China Mobile, China Unicom, and China Telecom (CHA - Analyst Report). Ericsson’s GPON technology will be used for high-speed internet access and high-definition IPTV services in 9 Chinese provinces.

We believe these new contracts will place firmly Ericsson in the growing Chinese wireless market where it competes fiercely with several large wireless network gear makers like Alcatel-Lucent (ALU - Analyst Report), Nokia-Siemens Network; a joint venture between Nokia Corp (NOK - Snapshot Report) & Siemens AG (SI - Analyst Report), Cisco Systems (CSCO - Analyst Report) and Huawei Technologies.