ZTE, Huawei win big in 4G network tender

Chinese telecom equipment vendors Huawei and Technologies Co Ltd and ZTE Corp acquired more than half of the contracts in the latest China Mobile Ltd's fourth-generation network tender, while foreign vendors acquired one-third, sources revealed.

On June 21, China Mobile launched its largest tender ever for 4G network construction, planning to purchase equipment for 207,000 4G base stations. The bidding result for the contract, which analysts estimated to be worth more than 20 billion yuan ($3.26 billion), has yet to be officially released.

However, an industry source, who declined to be named, said China Mobile has finished the preliminary work of allocating shares to different vendors. "It is for sure that Huawei and ZTE will take more than half of the contract," the source said.

Specifically, Huawei and ZTE are likely to have same share at about 26 percent each, while three foreign telecom equipment makers - Ericsson, Alcatel-Lucent and Nokia Solutions and Networks - will receive 30 percent or so in total, according to the source.

"The final result may change a little bit because some companies still want to have a last try," said the source.

Officials from China Mobile declined to comment on Thursday.

Against a backdrop that global telecom carriers are slowing their pace in network investment, 4G network construction contracts from Chinese telecom operators have attracted competition from various equipment vendors worldwide hoping for a slice of the pie.

China Mobile, the world's biggest telecom carrier by subscriber numbers, is the first Chinese operator to announce a clear 4G network deployment plan. Xi Guohua, China Mobile's chairman, said in an interview in June that China Mobile is going to set up 200,000 base stations in 100 cities by the end of the year.

In the first round of China Mobile's 4G bidding last year, Chinese telecom equipment manufacturers, including Huawei, ZTE and China Datang Corp, acquired about 70 percent of the carrier's contracts. Foreign rivals, such as Ericsson, have publicly expressed dissatisfaction over their contract shares.

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 with last year. "We hope to achieve a win-win situation with our rivals from China," said Borchert.

Nokia Siemens Networks, the former company name of Nokia Solutions and Networks before it was bought by Nokia Corp, gained a 7 percent share during the first round bidding of China Mobile's 4G tender last year. Ericsson acquired an 8.1 percent share and Alcatel-Lucent managed 14.5 percent, according to figures from research firm IHS iSuppli.

Another industry source said Nokia Solutions and Networks posted the lowest bidding price, at 33,500 yuan per carrier sector, among major telecom equipment vendors. Huawei and ZTE asked for about 35,000 yuan for each carrier sector, while Ericsson put in the highest bid.

Chen Haofei, a telecom analyst with China International Capital Corp Ltd, said a total share of more than 30 percent for foreign companies will be a good result for both parties. "Too small a share for foreign vendors will harm the globalization of China's 4G technology. The official result is likely to meet the European Union's expectations. Because Chinese telecom firms still face investigation pressure from the EU, a mild resolution would help them reduce obstacles in Europe," Chen said.