Ericsson snubbed in own back yard for LTE deal

The No. 1 infrastructure vendor Ericsson has been caused significant embarrassment by failing to win an LTE contract jointly awarded by Tele2 Sweden and the Swedish unit of Norway's Telenor.

To make matters worse - much worse, the deal was won by the Huawei - a company that is fast becoming Ericsson's arch-rival and major irritant to its ambitions to win a majority slice of the LTE market.

The two celcos used their joint wireless infrastructure venture, Net4Mobility, to place the contract with the aim of commercially launching LTE services in 2010. The goal is that 99 per cent of the Swedish population will be able to access the LTE network before the end of 2013, starting with densely populated areas. The deployment will also include increasing the number of base stations for 2G voice traffic by 30 to 50 per cent, with enhanced indoor and outdoor coverage across the country as a result.

Earlier this week, Swedish operator TeliaSonera launched the world's first commercial LTE services in Oslo, Norway and Stockholm, Sweden - the Stockholm network being provided by Ericsson, while Huawei won the contract in Oslo.

Commenting on the lost deal, Mikael Backstrom, head of Ericsson Nordics and Baltics, said, "We are disappointed that we did not manage to reach an agreement with Net4Mobility. In the negotiations, we went down as far as we could in price, but it was not enough."

According to analyst David Hallden at HQ Bank, Ericsson risks lower profit margins if it cuts prices to defend its market share from Huawei, adding that the company may have no choice but to accept lower-priced contracts because it needs to sell equipment in order to secure service deals, which are getting increasingly important.

For more on this story:
Telegeography and Total Telecom

Related stories:
Huawei scores in Europe with LTE
Vodafone draws Huawei into mobile core R&D lab
Telenor picks Huawei for 4G upgrade, rejects Ericsson and NSN
Huawei makes play for LTE patent leadership

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