Optical/IP Networks

Nortel Blitzes Euro 3G Rivals

Canadian equipment vendor Nortel Networks Corp. (NYSE/Toronto: NT) is reported to have stolen a march on foreign rivals by adding Vodafone U.K. to its high-profile list of European 3G carrier customers.

The vendor is close to beating Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Nokia Corp. (NYSE: NOK), and Siemens AG (NYSE: SI; Frankfurt: SIE) in their own regional backyard, securing a deal to supply Wideband-Code Division Multiple Access (W-CDMA) radio network kit, say several sources. Dow Jones Newswires first reported the story.

Lehman Brothers analyst Stuart Jeffrey says the deal is done, describing the move as "a key positive for Nortel, which has sustained positive contract momentum in the W-CDMA market during the course of the year."

The W-CDMA air interface is part of the Universal Mobile Telecommunications Standard (UMTS), which has been adopted as the European 3G standard. Used with existing Global System for Mobile Communications (GSM) core networks, the air interface can crank up data transfer rates to a maximum of 2 Mbit/s (at least in the lab).

The Vodafone win would continue Nortel's recent spate of lucrative European 3G contracts, following high-profile deals with mmO2 plc and Orange SA (London/Paris: OGE) (see O2 Can Do UMTS and Nortel Wins Orange 3G Deal).

A Nortel spokesman commented that a company statement on the deal would be released "soon."

Lehman's Jeffrey also hailed the win as a sharp kick in the teeth for Nortel's European rivals. "We believe that Nokia, Siemens, and Alcatel will be disappointed by the announcement. Nokia, which has an established W-CDMA relationship with Vodafone in Japan, is likely to be most disappointed" (see Nokia Expands J-Phone).

Ericsson is expected to remain as supplier of Vodafone U.K.'s core network infrastructure, including packet-based elements such as Serving GPRS Support Nodes (SGSNs), GPRS Gateway Support Nodes (GGSNs), and IP routers, as well as circuit-switched equipment such as Mobile Switching Centers (see A Wireless Taxonomy).

Nortel shares rose 0.06 percent to $4.62 per share in midday trading.

— Justin Springham, Senior Editor, Europe, Unstrung

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