Nortel Breaks China Record
Nortel Networks Corp. (NYSE/Toronto: NT) announced a slew of contract wins in China today, including a $101 million, 12-month deal to install Optera DWDM (dense wavelength-division multiplexing) gear for China Telecom's nationwide optical Internet backbone (see Nortel Scores $100M China Deal).
The award is symptomatic of an increasing focus by optical networking vendors on mining China's telecom market, a relatively new opportunity that's building up fast even as the North American market is slowing down.
"One of our key focuses is to continue our geographic penetration in Asia, which is a very important optical market," says Don Smith, president of Nortel's Optical Internet division. He acknowledges that Nortel's increased its presence in China, but declines to say how many people or facilities have been added. "I think this contract win speaks for itself," he says.
According to market research firm Ryan Hankin Kent Inc. (RHK), China will see a compound annual growth rate of 73 percent in sales of terrestrial DWDM gear over the next four years (see Research Touts Asia-Pacific Boom).
Other analysts show similar figures. "We predict quite rapid DWDM growth of about 70 percent annually for the next several years in the Asia-Pacific region," says Neil Dunay, senior analyst at market research firm KMI Corp.. In contrast, he says, DWDM growth in established markets in North America and Europe will be about 40 percent.
Today's announcement will help boost Nortel's share of this Asian booty. Terms of the agreement call for Nortel to install its Optera Long Haul 1600 and Optera Connect DX switches in the network of China Telecom's Internet arm, Chinanet -- which dominates China's Internet market, with about 140 million subscribers.
Nortel says this is the largest optical networking contract yet awarded in China to any vendor. Despite its boasts, however, Nortel's not the clear optical leader in China just yet. Lucent Technologies Inc. (NYSE: LU) claims it's doing just as well there -- if not better (see Lucent Signs $145M Contracts in China and Lucent-Powered Net Launches in China).
"Lucent's announced eight optical wins in China over the past eleven months, totalling $213 million," says Lucent spokesperson Frank Briamonte. The deals, terms of which range from one to about three years, include an $80 million agreement to supply Chinese service provider CITIC Pacific with DWDM and SDH (synchronous digital hierarchy) gear to facilitate the rollout of its 32,000-kilometer nationwide optical backbone.
Nortel, which says today's deal is its twentieth win in China, claims all of its contracts cover equipment designed to supply 35,000 kilometers of optical connections in China.
Other vendors also are clamoring for a share of the Chinese market. Alcatel SA (NYSE: ALA: Paris: CGEP:PA), Marconi Communications PLC (Nasdaq/London: MONI), and Redback Networks Inc. (Nasdaq: RBAK) have also won contracts there (see Alcatel Sells DWDM To China , Zaffire, UTStarcom Ink Marketing Pact, Marconi Announces 3 Chinese Deals, and Redback Reports China Contracts).
Several Chinese companies, such as Huawei, also are said to be doing DWDM business in China.
Nortel separately announced $165 million worth of mobile networking contracts in China. All the announcements coincided with the visit of Canada's prime minister Jean Chretien and the Team Canada 2001 trade mission to China this week.
-- Mary Jander, senior editor, Light Reading http://www.lightreading.com