China Telecom awards Alca-Lu $230m CDMA contract

China Telecom has awarded Alcatel-Lucent subsidiary Alcatel Shanghai Bell a $230 million contract to expand its CDMA network.

Alca-Lu will provide CDMA solutions for the operator in 56 cities of 9 provinces in China. Deployment is already underway, Alca-Lu has announced, and the expanded network will be ready for launch by the end of the year.

Despite the new eight-figure contract, market analysts are speculating that Alca-Lu CEO Ben Verwaayen may choose to exit the mobile network market.

The company has been struggling to maintain profitability in the mobile sector, and Verwaayen has promised to unveil a radical new business restructuring plan this month.

This has fuelled speculation that the company may dump the mobile business, and instead focus exclusively on fixed-line solutions, according to analysts quoted by Reuters. The analysts believe Alca-Lu can't expect any significant mobile contracts until 2010 (apparently $230 million is not  significant).

The company has denied it has any intention of exiting the mobile market, and Verwaayen is on record saying that the company views clawing out a prominent position in the LTE market a vital long-term goal.

And not all analysts agree that the move would be wise, with one analyst telling Reuters such a decision would be "suicidal," particularly in light of the industry trend towards converged services.

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