LM ERICSSON SIGNS BILLION DOLLAR DEAL WITH CHINESE TELECOMS
Learning Markets
Thursday, 09 July 2009 08:38
Wednesday, Swedish telecom equipment giant LM Ericsson Telephone
Co. (ERIC) said it signed US$1.7 billion worth framework agreements
with two major Chinese telecom operators on 2G/3G mobile communication
equipment and related services for 2009. Ericsson’s deal with China
Mobile Limited (CHL) is valued at US$1 billion, while the deal with
China Unicom Hong Kong Limited. (CHU) is valued at US$0.7 billion.
The Stockholm, Sweden-based company noted that the newly signed 2009
framework agreements will allow both operators to further improve
the capacity and performance of their 2G networks and accelerate the
initial build-up of their 3G networks.
Both Chinese companies have received 3G licenses of TD-SCDMA and WCDMA
standards, respectively, at the beginning of 2009, and they, together,
are currently serving more than 620 million mobile subscribers in
China. Ericsson added that the latest deals ensure richer and more
innovative mobile communication services to hundreds of millions of
Chinese consumers as 3G takes off in China.
Under the agreement with China Mobile, Ericsson said it continues
to deliver green solutions to support the Chinese company’s network
energy optimization and CO2 emission reduction target. Ericsson will
also expand GSM/GPRS network coverage and capacity in 18 provinces in
China with related services. Further, the company said it supports
China Mobile’s 3G network build-out by providing a wide range of
innovative TD-SCDMA products and solutions.
Ericsson, under its deal with China Unicom, will become the main
supplier to upgrade China Unicom’s GSM networks in 10 provinces, and
also will provide the operator with GSM/WCDMA core network and/or
wireless access system in 15 provinces, including transmission, IP
and value-added service platform. The company’s strong local support
team would be supporting China Unicom in launching the world’s largest
WCDMA commercial networks.
Commenting on the deals, Mats Olsson, President of Ericsson Greater
China, said, "China’s 3G market is growing rapidly and the world
is watching closely. Ericsson has been devoted to supporting the
development of China’s telecom industry. The signing of the 2009
framework agreements today further enhances the position of Ericsson
as the leading mobile communications supplier in China market."
Last week, Ericsson had said that it received contracts to provide
fixed broadband access to three Chinese telecom operators; China
Mobile, China Unicom, as well as China Telecom Corp. Ltd. (CHA). The
contracts are part of Chinese companies’ upgradation in their networks
with the latest available technology, with which subscribers in an
initial nine Chinese provinces will get access to high-definition TV,
high-speed broadband and quality voice services.
Tuesday, Ericsson said it signed a contract with SMART Communications
Inc. to provide High Speed Packet Access or HSPA/WCDMA-based broadband
technology in Philippines. In June, Ericsson signed a deal with
Armenian operator Ucom to provide high-quality, interactive TV to
viewers in that country, and also signed a five-year strategic managed
services agreement with Mobile Telecommunications Co. KSC, under which
Ericsson will operate Zain’s nationwide GSM/WCDMA networks in Nigeria.
ERIC closed Tuesday’s regular trading session at $9.29, down $0.28,
on a volume of 3.6 million shares. In the past 52 weeks, shares have
been trading between $5.49 and $12.65.
CHL settled at $47.80 on Tuesday, down $0.80 from previous day’s close,
on a 2.2 million share volume, while CHU closed at $13.10, down $0.06,
on a volume of 2 million shares.
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