China Mobile Ltd. (CHL - Free Report) recently selected Ericsson’s (ERIC - Free Report) LTE TDD technology for upgrading its nationwide 2G, 3G and 4G network covering 15 provinces. Ericsson will be required to provide radio access network, Evolved Packet Core and expand the base of installed networks. The financial terms of the contract were not disclosed.
Prior to this contract, Ericsson did not have any 3G footprint with China Mobile. However now, this deal will allow Ericsson to strengthen its position in one of the fastest growing markets in the world. The deal will provide Ericsson a wide and important position in the Chinese broadband market, as the 15 provinces comprises about 63% of China’s population and include three of the most important provinces in terms of GDP.
Through this deal, Ericsson will be the primary supplier for China Mobile in its core segment, as Ericsson will upgrade its User Data Management (HLR/HSS), which comprises about 40% of the market share, and will also provide Evolved Packet Core, comprising 20% of the market share in China.
China Mobile is one of the leading mobile companies in China with a total customer base of approximately 759 million (approx 60% of the entire subscriptions in the country), of which it has about 176 million of 3G customer base (as of Oct 31, 2013). Further, China is one of the promising markets for mobile data services and smartphones, which is growing at a rate of over 50% every year. Therefore, China Mobile is deploying such huge infrastructure to support the ever-increasing demand for mobile Internet, video and data in the world's largest smartphone market.
On Nov 15, China Mobile had selected Alcatel-Lucent, S.A.’s all-IP Evolved Packet Core portfolio to support its 4G LTE Network, which is supposed to be the world’s biggest ultra broadband network.
Chinahas been one of the important markets for Ericsson since 1892. Currently, Ericsson has one of its largest R&D bases and supply and manufacturing sites in China. This apart, Ericsson was a pioneering developer of the TDD mode of the LTE standard and has made many significant contributions to the advancement of LTE TDD. Ericsson's LTE TDD and FDD solutions share the same hardware platform, with commonly applicable software and features, ensuring that LTE TDD will deliver the same high performance and reliability.
Ericsson is the world’s largest supplier of LTE technology with approximately 13% market share. To date, Ericsson has delivered more than 180 LTE RAN and Evolved Packet Core networks worldwide, of which more than 110 have gone live.
Ericsson currently has a Zacks Rank #3 (Hold). Another stock worth mentioning is Ubiquiti Networks, Inc. (UBNT - Free Report) , which carries a Zacks Rank #1 (Strong Buy).