Huawei signs new Nordic deal in another blow for Ericsson
Nordic telecom operators Tele2 AB and Telenor ASA said Friday their Net4Mobility joint venture has contracted Huawei to supply infrastructure for its fourth-generation networks in Sweden, in another blow in its home region to Sweden's L.M. Ericsson Telephone Co., the world's largest network equipment vendor.
The 4G network, which will allow higher data speeds than current network technologies, will be launched in 2010. Before the end of 2013, the goal is to give 99% of Sweden's population access to the new network, the operators said. Shenzhen, China-based Huawei will provide both the infrastructure and the modems for the network.
Net4Mobility, which was formed in April, is an equal-share joint venture between Swedish operator Tele2 and Norway-based Telenor.
Ericsson, together with European peers Alcatel Lucent SA and Nokia Siemens Networks, the joint venture between Nokia Corp. and Siemens AG, has faced increased pressure from Huawei in recent quarters. Last month, Telenor chose the Chinese vendor to upgrade its entire Norwegian wireless network, replacing gear provided by Ericsson and Nokia Siemens Networks.
Earlier this week, Swedish operator TeliaSonera AB launched the world's first commercial 4G mobile services in Oslo, Norway and Stockholm, Sweden. The Stockholm network is provided by Ericsson while Huawei got the contract in Oslo.
"We are disappointed that we did not manage to reach an agreement with Net4Mobility," said Mikael Backstrom, head of Ericsson Nordics and Baltics."In the negotiations, we went down as far as we could in price, but it was not enough."
Huawei has long competed with low prices but the quality of its equipment is also getting better and this helped it almost double its global market share to around 20% in the third quarter 2009 from a year earlier, analyst Scott Siegler at research firm Dell'Oro told Dow Jones Newswires in a recent interview.
"Huawei provides high technology and cost efficiency, both vital components in our investments to build a nationwide 4G network," Tele2 Sweden Chief Executive Niclas Palmstierna said Friday.
As an increasing number of operators start rolling out networks based on the new 4G technology, market watchers see potential for newcomers like Huawei to win further ground.
"We expect the transition to 4G will allow Huawei to gain momentum in Europe," Goldman Sachs said in a recent note to investors."Clearly there are rising competitive risks in Western Europe."
Ericsson risks lower profit margins if it cuts prices to defend its market share from Huawei, said analyst David Hallden at HQ Bank. Still, he said the Swedish vendor may have no choice but to accept lower-priced contracts because it needs to sell equipment in order to secure service deals, which are getting increasingly important.
Investors are aware that Huawei is gaining ground in overseas market, so Friday's news is already discounted in Ericsson's share price, Hallden added.
At 1116 GMT, shares in Ericsson were up 0.8% at SEK66.05, against a 0.1% rise in the wider Stockholm market.
Источник: Total Telecom
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