Ericsson borrows big for R&D, wins Hong Kong TD-LTE contract

Infrastructure provider Ericsson (NASDAQ:ERIC) is bankrolling mobile broadband R&D activities via a major loan agreement with Nordic Investment Bank, a pact that arrived on the heels of a milestone TD-LTE deployment agreement with China Mobile Hong Kong.

Ericsson said it will borrow €150 million ($181.7 million), divided into two equal tranches with respective seven- and nine-year maturities. The vendor said the loan will fund "Ericsson's R&D activities in Sweden and Finland to further develop the next generation mobile broadband technology," and added that the funds "will refinance part of debt maturing in 2012-2014, extend the debt maturity profile and will further diversify funding sources."

"To keep up with the increased complexity we need to maintain a high level of R&D investment. With support from the Nordic Investment Bank, we will be able to further our technology leadership in radio and IP," said Johan Wibergh, head of business unit networks at Ericsson.

The vendor's positioning as a leader in telecommunications infrastructure got a boost one day before it announced the new loan, with the disclosure that China Mobile Hong Kong (CMHK) has selected the Swedish company to add TDD technology to the commercial LTE FDD network that Ericsson has already supplied to the operator.

Ericsson--the sole supplier for CMHK's LTE FDD network--said it will work with the operator to create a converged LTE FDD/TDD network. Ericsson will also upgrade, expand and perform systems integration of the operator's Evolved Packet Core network (EPC).

CMHK introduced LTE FDD mobile data services in April of this year. "The converged LTE FDD/TDD network will be launched as early as the fourth quarter, when devices that support both modes become available in larger volumes," said Ericsson.

The CMHK contract is good news for Ericsson, which recently reported that operator cutbacks had harmed its second-quarter 2012 financial results. The vendor reported second-quarter net income of €141 million, down 63 percent from one year earlier.

Late last month, Ericsson announced that it had performed the first bidirectional handover between LTE's FDD and TDD flavors on a live network, which was in fact CMHK's LTE FDD network.

CMHK is the Hong Kong subsidiary of China Mobile, the world's largest mobile operator. China Mobile said its subscriber base increased in June to 683.08 million, which includes 67.08 million 3G subscribers, according to Reuters.

Ericsson said it has so far signed 67 LTE/EPC contracts in 30 countries on five continents.

For more:
- see this Ericsson release and this other release
- see this Reuters article

Related articles:
Clearwire signs TD-LTE roaming pact with China Mobile
Ericsson's struggle continues as operators hold back orders
Carriers hold key to TD-LTE's out-of-the-gate performance
Ericsson demos LTE FDD and TDD interworking
Report: TD-LTE to power 25% of LTE connections by 2016

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