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Huawei Eyes Euro 3G

HANGTOUGH, Germany -- CeBIT 2004 -- Huawei Technologies Co. Ltd. has fired a warning shot at Europe’s 3G suppliers, claiming it plans to strike W-CDMA (Wideband-Code Division Mutiple Access) deals with the region’s carriers within the next two years.

China’s largest network equipment vendor has been talking up its chances of European 3G success following earlier CDMA 450 contracts in the region. To date, the company has scored wins with Portugal’s Inquam Ltd., BelCel in Belarus, and JSC Uzbektelecom in Uzbekistan, despite setting up a regional base as recently as 2001 (see CDMA 450 Seeps Into Europe).

Such success is the catalyst for bullish company ambitions in Europe’s W-CDMA market -- an industry dominated by the likes of LM Ericsson (Nasdaq: ERICY), Nokia Corp. (NYSE: NOK), Nortel Networks Corp. (NYSE/Toronto: NT), and Siemens AG (NYSE: SI; Frankfurt: SIE).

The W-CDMA air interface is part of the Universal Mobile Telecommunications Standard (UMTS), adopted as the European 3G standard. Used with GSM core networks, W-CDMA-compliant handsets and base stations can potentially increase wireless data transfer rates to a maximum of 2 Mbit/s.

“I am convinced we will have major inroads into Europe’s mobile carriers,” company spokesman Soeren Puerschel tells Unstrung. “The first round of W-CDMA deployments has passed, but we are in discussions with major carriers for future rounds. This year is still a little early for W-CDMA, but next year is a very good chance.”

Puerschel argues that Huawei’s late entrance could actually work in its favor. “The early difficulties in Europe with 3G have meant carriers are looking for alternatives. Operators don’t want to have the same as their competitors. How can they then differentiate their services if they all buy from the same vendor? Obviously, we are behind everyone else because of the existing GSM base, but on a technology level we are on a par.”

Analysts cite Huawei’s recent CDMA 450 deal with Inquam as a potential turning point for the vendor’s European prospects. “To have a contract in Western Europe when you have only been in the market a couple of years is no mean achievement,” notes Gartner Inc.'s principal analyst Jason Chapman. “Whilst right now it looks a bit ambitious to have a W-CDMA contract, I certainly wouldn’t write it off. They are the first Chinese vendor to be in Europe under their own steam.”

It seems clear that Huawei will not soon give up the fight. “We have a long-term commitment to the European market,” says Puerschel. “If operators don’t listen to us first time, then we will talk again. We can keep talking for one to two years, no problem. As long as our customers are open to discussions, we will be successful in the end. Time is on our side.”

— Justin Springham, Senior Editor, Europe, Unstrung

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