Huawei wins TDC LTE deal away from Ericsson

Huawei is fully expecting to take a large slice of the LTE network pie, and senior company executives said they reckon the firm will generate around $2 billion (€1.5 billion) this year in revenue from LTE deployments in Asia and Europe.

The Chinese equipment manufacturer's forecast came as Danish operator TDC also announced on Wednesday it had selected Huawei for its LTE network in a contract worth 4 billion Danish kroner (€536 million or $717 million) over six years starting in March 2014. The deal enables Huawei to snatch a contract from Ericsson in the Swedish vendor's own back yard.

Bob Cai, vice president for Huawei's wireless marketing, told Reuters that Huawei's LTE revenue was insignificant last year, but grew quickly to $1 billion in the first half of the year.

Huawei is already forging ahead in the global mobile infrastructure radio access network (RAN) market, according to recent figures from ABI Research:;the research company said in August that Huawei increased its share of the mobile infrastructure RAN market by 7.2 percentage points sequentially to 31.1 per cent in the second quarter, meaning that it has overtaken Ericsson to regain the No. 1 market position. The latest LTE deal awarded to Huawei by TDC is a blow for Ericsson, which was the Danish operator's former vendor.

According to Informa Telecoms & Media, Huawei has so far accounted for 40 per cent of global LTE network contract awards, and Ericsson has accounted for 34 per cent. Nokia Solutions and Networks (NSN) has a 17 per cent share, while Alcatel-Lucent, ZTE, Samsung and NEC share 9 per cent of allocated contracts.

In the entire 2G/3G/LTE macrocell market, Infonetics Research said Huawei is now in second place after Ericsson thanks to projects at Bouygues Telecom, Etisalat, EE, MTS, Mobily, Vodafone Germany, Claro and Vivo. Infonetics Research added that LTE revenue was estimated at $3.3 billion in the second quarter of 2013, a 119 per cent increase compared to the previous year.

Huawei's LTE position is also helped by its close ties with China Mobile, which is building out a TD-LTE network across China: reports in August indicated that China Mobile awarded initial contracts to equipment vendors worth around 20 billion yuan (€2.45 billion or $3.27 billion) for its TD-LTE network, with Huawei and fellow Chinese vendor ZTE securing around 50 per cent of the deal and three major European manufacturers sharing around 30 per cent. Ericsson, Alcatel-Lucent and NSN each reportedly gained around 10 per cent of the contract, although the negotiations are not final.

"LTE continues to ramp up at a fast pace with a shift away from Japan and Korea to EMEA, Brazil, and Russia," said Stéphane Téral, principal analyst at Infonetics Research. "And China is joining in a big way with two-thirds of total spending this year earmarked for LTE and expected by year's end. As a result, 2013 is shaping up to be a peak year for macrocell mobile deployments."

Huawei also recently announced it had doubled its investment into research and development in Europe between 2010 and 2013, and said it expects that number to double again over the next five years. A major focus will be on technologies to help operators and businesses "manage the rising volumes of data that are now flooding their networks".

Nonetheless, Huawei executives told Reuters that LTE smartphones would need to come down in price to allow the technology to enter the mainstream: "The price of LTE smartphones is still higher that those without LTE technology. This is normal," said Peter Zhou, executive vice president for the LTE business unit at Huawei.

Zhou said he expects prices for smartphones that support LTE to be similar or equal to the price of a non-LTE smartphone in around 2015, by which time the proportion of LTE smartphones would also be much bigger.

Huawei said there are around 100 million LTE users globally right now. Informa said the number of LTE subscriptions worldwide is expected to be 1.36 billion at the end of 2018. Infonetics anticipates that LTE subscribers could top 608 million by 2017.

For more:
- see this Reuters article
- see this Wall Street Journal article (sub. req.)

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