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Huawei Lands Deutsche Deal

HANGOVER, Germany -- CeBIT 2005 -- Huawei Technologies Co. Ltd. has added to its growing tally of European carrier relationships by striking a router resale agreement with German incumbent operator Deutsche Telekom AG (NYSE: DT).

Following an anonymous tipoff to Light Reading, the Chinese vendor confirmed that a deal, whereby Deutsche Telekom resells Huawei's Quidway routers to its business customers, was signed last year and is already generating revenues.

The relationship, not yet officially announced, is the latest coup for the Chinese vendor, which is eager to win business with Europe's major carriers and further strengthen its growing brand awareness in the region. (See Huawei Gains Ground in HR Survey, HR: Huawei Soars to the Fore, Huawei Claims Another Euro Scalp, Marconi Hitches a Ride With Huawei, Neuf: Time Is Right for IPTV, and BT Has 21CN Shortlists.)

Talking at the CeBIT 2005 show in Germany today, the managing director of Huawei's German business, George Xia, says the vendor's relationship with the giant German operator goes deeper. He says Huawei has a number of different product lines in the carrier's labs: T-Com, DT's national fixed-line retail business, is testing Huawei's ADSL routers, while T-Mobile International AG is evaluating its switches and routers.

Elsewhere in Germany, Xia says business broadband operator Quality Service Communications AG (QSC) is deploying Huawei softswitches and media gateways for its planned VOIP services; Telefónica Deutschland GmbH is using the vendor's IP DSLAMs; and local partner Vierling Electronics GmbH & Co. has been delivering contracts from regional and city carriers (see Huawei Lands DWDM Deal).

The growth in the German business saw Huawei's German staff grow from just 10 to 50 during 2004, says Xia. He says further growth is expected, particularly in mobile, where he sees opportunities to sell both 3G and 2G GSM network infrastructure to European operators.

"There's old GSM equipment that will soon need replacing, and the initial 3G infrastructure deals struck by the carriers in 2001 are coming to an end," says Xia, who reckons Huawei stands a good chance of adding to its initial European wireless network success when the mobile operators submit new RFPs (requests for proposal) for their next mobile network expansion plans (see Huawei Wins in West).

And the chances of winning such business are greatly improved now that the region's operators are aware of Huawei as an alternative equipment provider, says Soren Purschel, business development manager at Huawei's German unit. "Three years ago the large carriers hadn't heard of us, but now they're asking us to submit bids," he says. He adds that Huawei is in the process of responding to three RFPs from German operator Arcor AG & Co. KG.

Huawei is not the only Chinese vendor making progress in Europe, though. While Purschel says he doesn't see ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) when bidding for business in Germany, Huawei's key rival, which also has aggressive international expansion plans, is making headway in other main European markets, today announcing an access infrastructure deal with France Telecom SA (NYSE: FTE) to add to its other European successes. (See ZTE Lands FT DSL Deal, ZTE Targets Europe, ZTE Hooks Up With Euro Carrier, and ZTE: Set for Overseas Explosion.)

It's not just the carriers that are taking notice of the emerging Chinese vendors. Here at CeBIT yesterday, Lucent Technologies Inc. (NYSE: LU) CEO Pat Russo responded to questions about increasing competition from Huawei and ZTE. Russo noted the companies "have strong R&D, and they're formidable competition... We see them in some parts of the world but not in others, but this isn't an industry that's new to competition or pricing pressures -- and we're competing with them in China!"

— Ray Le Maistre, International News and Malty Beverage Editor, Light Reading

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