Alcatel-Lucent Soars on $1B China Deal

Alcatel-Lucent watched its stock gain nearly 4% in early trading Thursday morning following news of a major network infrastructure deal in China. (See China Mobile Picks Alcatel-Lucent for IP, Broadband .)

The vendor is to provide a range of technology products and services to China Mobile Ltd. (NYSE: CHL) in a one-year "framework" deal valued at up to €750 million (US$1 billion).

The "framework" nature of the deal means China Mobile could order variable volumes of goods and services in the course of the next year up to the maximum value of the contract.

The news lifted AlcaLu's stock by 3.7% to $3.83 on the New York exchange by late morning Thursday.

China Mobile is investing heavily in its network infrastructure currently, and has turned to Alcatel-Lucent (NYSE: ALU) for a range of technology platforms, including fixed broadband access (including GPON gear), 4G LTE mobile broadband access equipment -- including the lightRadio Metro Radio Outdoor (MRO) Small Cells developed especially for and in conjunction with China Mobile -- backhaul and packet core IP platforms and optical transport equipment (including OTN 100G systems). AlcaLu is also supplying professional services.

The vendor is already well established at China Mobile as a technology supplier, having previously announced radio access and packet core deals with the operator. In addition, the duo showed off NFV capabilities during the recent Mobile World Congress event in Barcelona. (See China Mobile, Alcatel-Lucent to Demo NFV at MWC14, AlcaLu Gains LTE Traction in China, AlcaLu Grabs Core Deal in China, and Alcatel-Lucent Wins 4G LTE Deal With China Mobile.)

China Mobile has increased its capital expenditure budget by almost 22% compared with 2013, with plans to invest 225.2 billion Yuan Renminbi (US$36.2 billion) in 2014, with 44% of that investment dedicated to its mobile network infrastructure.

The operator, which has 775 million mobile customers (including 1.34 million connected to its new LTE TDD networks), is transforming its network to accommodate an expected surge in fixed and mobile broadband usage in China. Its main rivals, China Telecom Corp. Ltd. and China Unicom Ltd., are doing likewise. (See China Unicom Calls 4G Tender.)

— Ray Le Maistre, , Editor-in-Chief, Light Reading