The nightmare of increased competition continues to worsen for the established infrastructure suppliers as mobile operators award contracts to Chinese manufacturers. The latest example is T-Mobile selecting Huawei to provide it with Packet Switched Core Network (PS-CN) elements across five European countries: Germany, the U.K., Austria, the Netherlands and the Czech Republic.
The deal will see the existing Nortel equipment replaced by a Huawei kit in what is considered by many to be strategic areas of T-Mobile's network infrastructure. According to Patrick Donegan, a wireless analyst with Heavy Reading, the contract is highly significant for the Chinese vendor and the market in general.
"From a revenue standpoint this is not Huawei's most important European deal, but, strategically, this is conceivably its most important European mobile infrastructure contract to date." The wireless business Huawei has won so far with other major European mobile carriers, such as Telecom Italia Mobile and Vodafone Group, "has been at the periphery of the account, but this deal is right at the heart of T-Mobile, and includes many of the carrier's main European markets," he explained.
However, Donegan admits that, while Huawei continues to offer aggressive prices and to win wireless deals, it's difficult, if not impossible, to see how they can be making any money from the deal. "This is a continuation of the strategy that has got them where they are today."