China Mobile has reportedly awarded initial contracts to equipment vendors worth around 20 billion yuan ($3.26 billion or €2.44 billion) for its TD-LTE network, with Huawei and ZTE securing around 50 per cent of the deal and three major European manufacturers sharing around 30 per cent.
Unnamed sources close to the negotiations told Reuters that Ericsson, Alcatel-Lucent and Nokia Solutions and Networks (NSN) have each gained around 10 per cent of the contract, although the negotiations are not final. The two Chinese vendors are reported to have been awarded around 25-26 per cent each. That fits with a Wall Street Journal report, which, citing unnamed sources, said the three European vendors secured one-third of the contract.
Ericsson was unable to confirm the reports, saying that negotiations are still ongoing and it could not comment on speculation. China Mobile didn't respond to a request for comment, according to the Journal.
China Mobile did tell Reuters in a statement that the tender had begun and it is planning to build 200,000 base stations this year, in line with its previous target. According to previous reports, China Mobile posted an online tender on June 21 saying it plans to buy equipment for 207,000 base stations in 31 provinces across China. The final results are expected to be revealed in September.
The Chinese government is also expected to issue licences for LTE-based networks (both TDD and FDD) this year. In addition, China Mobile is believed to be close to a deal with Apple to sell an iPhone in China that supports its TD-LTE technology.
European vendors had been hoping for a larger slice of this latest China Mobile bidding round compared to earlier rounds. Markus Borchert, president of Nokia Solutions and Networks China, told China Daily last week that his company was optimistic about grabbing a larger share of the China Mobile tender compared to last year. NSN gained around 7 per cent of the tender in the first round of bidding last year.
Chen Haofei, a telecoms analyst with China International Capital Corp, told China Daily that a total share of more than 30 per cent for foreign companies would be a good result for both parties. "Too small a share for foreign vendors will harm the globalisation of China's 4G technology. The official result is likely to meet the European Union's expectations," Chen said. "Because Chinese telecom firms still face investigation pressure from the EU, a mild resolution would help them reduce obstacles in Europe."
The European Commission has previously said it is ready to investigate Huawei and ZTE over alleged state subsidies and dumping, although it is first seeking an amicable solution. Reports have previously suggested that the EU investigation is being delayed until after European vendors have secured satisfactory slices of the China Mobile tender, but the Commission has so far refuted claims that there is a link between the tender and the solution to the China telecoms case.
For more:
- see this Reuters article
- see this China Daily article
- see this WSJ article (sub. req.)
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