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5G

Nokia China chief publishes open letter over lost 5G contracts

Nokia's China chief has written an open letter over the company's failure to win a share of China Mobile's giant 5G tender.

Markus Borchert, CEO of Nokia Shanghai Bell, has also been forced to disown a letter apparently sent by Nokia to China Unicom.

China Mobile's 37.1 billion yuan (US$5.3 billion) tender, announced last week, was awarded overwhelmingly to Chinese vendors.

But while Ericsson picked up around 11% of the total, Nokia was unable to win a single piece of the tender.

In his open letter, published in the official People's Post & Telecommunications News, Borchert acknowledged "a great deal of news and comment about our company's failure" in the China Mobile tender.

He said Nokia "accepts and respects China Mobile's decision" but added: "We need to emphasize that we will continue to serve China Mobile unswervingly. Our strategy, with China Mobile as one of our most important partners, remains unchanged."

Borchert went on to say that another letter, written by NSB to China Unicom, "does not represent our position and attitude."

The unsigned letter, carrying the Nokia Shanghai Bell logo, was dated March 31.

A company spokesperson said the letter was not authorized and the matter is under investigation.

In the letter, published by business newspaper Economic Observer on April 4, the writer blamed "drastic price cuts" for the company's "unexpected failure" to be shortlisted for any of the China Mobile contracts across 28 provinces.

With a China Unicom 5G tender now underway, the author urged the telco's leaders to take into account "the historical service performance of various vendors when formulating their procurement plans, [in order] to avoid low-cost and low-energy vendors gaining a large share, which will affect the long-term development of China Unicom's 5G business."

Economic Observer quoted local telecom industry analyst Xiang Ligang, who said Nokia had written the letter "to try to gain more opportunities" from Unicom.

Xiang said the gap between domestic and foreign vendors in market share had been growing since the 3G era, and was now about 4:1.

"Foreign vendors' products are not competitive," he said.

Nokia Shanghai Bell Co, which carried out all of Nokia's China business, is a 50:50 JV with Chinese government-owned China Huaxin. It was formed in 2017 after Nokia acquired Alcatel-Lucent.

The company made a €47 million ($51.1 million) loss in 2019 on 20% lower sales of €2.0 billion.

— Robert Clark, contributing editor, special to Light Reading

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