Ericsson Gets $1.7 Billion China Deal

Swedish wireless equipment maker struck a deal worth $1.7 billion to provide second- and third-generation mobile communication equipment and services.

STOCKHOLM (AP) -- Swedish wireless equipment maker LM Ericsson on Wednesday announced it has struck deals worth $1.7 billion with China Mobile and China Unicom to provide second- and third-generation mobile communication equipment and services.

Under the deal, Stockholm-based Ericsson said it will help improve capacity on the operator's older networks based on the second-generation technology as well as help speed up installation of new 3G networks.

The deals also include environmentally friendly solutions to support China Mobile's energy optimization plan and a CO2 emission reduction target.

"Ericsson has been devoted to supporting the development of China's telecom industry," Mats Olsson, president of Ericsson Greater China, said in a statement, adding that China's 3G market was growing rapidly.

Ericsson estimates that China Mobile and China Unicom have more than 620 million subscribers.

Spokeswoman Minako Nakatsuma Olofzon said work on the networks had already started and would continue throughout 2009, but she could not specify a completion date.

Ericsson's stock price did not change in reaction to the news.

Greger Johansson, a Stockholm-based analyst at Redeye, a research firm, said investors already had factored the deals into the stock's price, given Ericsson's long-standing relations with both Chinese operators.

"But they are two of the world's largest operators, so it's important they (Ericsson) maintain that contact," he said.

More in Supply Chain