Cell-phone giants sign $1B deal with No. 2 operator in China

By Anna Dubrovsky
Bloomberg News Service

NEW YORK — Lucent Technologies Inc., Motorola Inc., Nortel Networks Corp. and Ericsson AB won more than $1 billion of orders to expand the network of China's second-largest mobile-phone operator.

China United Telecommunications Corp., also known as Unicom, is expanding and improving its code-division multiple-access (CDMA) network to lure customers from bigger rival China Mobile Communications Corp.

Winning the Chinese contract is a boon for telephone-equipment providers who have been hurt by slumping revenue as customers in the United States and Europe scale back spending.

"China is one of the few areas in today's telecom market that is aggressively investing," said Ake Persson, president of Ericsson's CDMA systems subsidiary. In other areas, "times are slow."

Lucent, the No. 1 maker of phone equipment in North America, received orders valued by Unicom at $428 million. Unicom said the largest award went to Murray Hill, N.J.-based Lucent.

Motorola, the world's second-largest mobile-phone maker, signed contracts worth $350 million, based on Unicom's figures. Motorola said the contracts are worth $446 million, which would make Motorola the largest recipient. Neither company could explain the discrepancy.

Ontario-based Nortel, the No. 2 maker of phone equipment in North America, said it won contracts valued at $280 million. Nortel will supply equipment for networks in Zhejiang, Shandong, Heilongjiang, Henan and Jiangxi provinces and in the city of Chongqing.

Ericsson, the world's biggest maker of cellular-phone networks, will fill orders of $156 million.

China overtook the United States as the largest cellular market this year, with 190.4 million mobile-phone users as of Sept. 30. Most subscribe to older networks based on global systems for mobile communications technology.

Unicom spent $2.5 billion last year to build China's first CMDA network, using Nortel, Lucent, Motorola and Ericsson. Unicom is now upgrading its network to a standard known as CDMA-1X, which will allow it to offer high-speed data services such as Internet access and streaming video.

Unicom said it has already begun expanding and upgrading its network and expects to complete the project by the second quarter. The network, which had 2.3 million subscribers at the end of last month, will be able to serve more than 30 million subscribers.