A multimillion-dollar deal won by Ericsson AB (Nasdaq: ERICY) in China could also benefit Juniper Networks Inc. (Nasdaq: JNPR). But the two companies are keeping mum on specifics.

Here's the lowdown: Last Thursday, Ericsson announced it had finalized more than $400 million worth of GSM mobile and IP backbone equipment contracts in China (see Ericsson Gets $400M China Deal). Like other broadband equipment suppliers, Ericsson's been intent on gaining a slice of the Chinese market, which is growing exponentially and represents one of the biggest worldwide opportunities for networking buildouts (see Avici Opens in China).

Eleven contracts are involved, and Ericsson's only released the specific amounts of those that include cellular gear. The remainder, say spokespeople -- roughly $59 million or 15 percent of the overall package -- is spread in undisclosed portions among Shangdong Telecom, Jiangsu Mobile, and China Telecom. And these are the carriers who will use the routers Ericsson OEM's from Juniper to build IP data services.

Citing quiet-period restrictions prior to its upcoming earnings report this Thursday, Juniper declined to comment on exactly how much it might benefit from the deal.

Spokespeople indicate that the terms of the new Chinese contracts could vary from the terms of the main resale agreement between the two companies, through which Ericsson purchases M160 and M20 routers from Juniper, adds network management, and resells the gear under its own brand, as Ericsson AXI 580 and AXI 520 IP routers. But just how much leeway there is in individual contracts worldwide isn't public knowledge. And both companies seem intent on keeping that their little secret.

Juniper has its own projects afoot in China. Earlier this year, for instance, it boasted of gaining an unspecified chunk of another $400 million IP agreement, thanks to a joint venture with the Lightscape Networks division of ECI Telecom Ltd. (Nasdaq/NM: ECIL), which is supplying DWDMs (dense wavelength-division multiplexers) for the deal.

Ericsson and Juniper have enjoyed a close and multifaceted relationship since March 1999, when they established the initial router resale agreement. The two also have an ongoing technology marketing agreement, as evinced by a November 2000 announcement that they plan to cooperate in providing "Mobile Internet" buildouts for carriers worldwide, incorporating Ericsson's mobile gear and Juniper's IP.

Until recently, Ericsson was a minority stakeholder in Juniper, but it sold its remaining position March 27, 2001, gaining about 5.5 billion Swedish kronor (roughly US$540 million), which will show as a capital gain transaction for the first quarter of 2001 (see Ericsson Unloads Juniper Stock)

Ericsson was the first vendor to set up a resale agreement with Juniper, although Juniper has others now, as well, including those with Alcatel SA (NYSE: ALA; Paris: CGEP:PA) and Nortel Networks Corp. (NYSE/Toronto: NT).

"Our early entry gave us at least a year's lead over others, especially in setting up network management for Juniper routers," says an Ericsson spokesperson.

- Mary Jander, Senior Editor, Light Reading http://www.lightreading.com