ZTE Preps European Deal

ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) is gearing up to announce a European network infrastructure partnership, with the finger of suspicion pointing at French equipment supplier Alcatel (NYSE: ALA; Paris: CGEP:PA).

According to a statement from the Chinese company, ZTE “will announce a major global partnership with one of Europe’s top telecoms vendors on the opening day of the 3GSM World Congress and Exhibition” on February 14.

The majority of analysts Unstrung has spoken to believe that Alcatel is the likely mystery vendor. One source says the Gallic company will sell ZTE’s CDMA infrastructure equipment globally and puts a price tag of $500 million on the deal.

Such a deal would make sense, on paper at least. ZTE claims to be the most successful Chinese CDMA vendor and has made public its intention to generate 40 percent of its revenues from international sales by 2006 (see ZTE: Set for Overseas Explosion). Meanwhile, Alcatel has a history of Chinese vendor alliances and would welcome a boost to its early loss of momentum in the CDMA2000 1xEV-DO (Evolution, Data Only) network battle (see Alcatel Tangos With Datang and Alcatel, TCL Team on Handsets).

Naturally, both Alcatel and ZTE declined to comment.

— Justin Springham, Senior Editor, Europe, Unstrung

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