Orange Chews 3G Kit

Orange SA (London/Paris: OGE) may have put an end today to speculation over its choice of 3G network suppliers, but a number of critical issues remain unanswered.

The carrier has confirmed rumours it is entering into "non-binding" agreements with Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Nokia Corp. (NYSE: NOK), and Nortel Networks Corp. (NYSE/Toronto: NT) for the supply of Wideband Code-Division Multiple Access (W-CDMA) equipment throughout its European subsidiaries (see Orange Clarifies 3G Rumours, Nokia Supplies 3G Orange and Nortel Wins Orange 3G Deal).

The W-CDMA air interface is part of the Universal Mobile Telecommunications Service (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).

What Orange won’t reveal, however, are the allocations of each contract or their financial value. A spokesman from parent company France Telecom SA (NYSE: FTE) said no decision has yet been made on the terms and conditions of the deals and that such a choice will be made “in the coming months.”

Alcatel is claiming otherwise. Spokeswoman Aurolie Boutin confirms media reports stating that the vendor has been retained as the principal supplier for the French network and will be the second largest supplier in the U.K. “Those comments are correct,” she tells Unstrung.

Nortel and Nokia declined to comment on their own specific involvement.

Despite the uncertainty, it is clear that the deals will prove significant for all three vendors. Orange has acquired 3G licenses in ten European countries -- Belgium, Denmark, France, Luxembourg, the Netherlands, Romania, Slovakia, Sweden, Switzerland, and the U.K. -- and in June outlined its intention to streamline infrastructure across all of its operations (see Orange to Gang Up on Vodafone and Orange Unveils Group Strategy).

“Orange wants to have some kind of uniformity and standardized approach across the whole of its operation,” notes IDC’s senior analyst Paolo Pescatore. “That is the reason for today’s group-wide contract.”

Shares in the three vendors rose following the announcement. Nortel’s stock leapt up 8.43 percent to $4.50; Alcatel reversed an earlier loss to end 3.5 percent stronger at €11.01 ($12.3); and Nokia rose 0.4 percent to close at €13.9 ($15.5).

— Justin Springham, Senior Editor, Europe, Unstrung

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