Top Chinese telecom equipment manufacturer Huawei Technologies has won a contract from Telefnica, one of the world's largest telecom operators, to build a mobile network in Latin America.
The deal, which points to the growing preference of global operators for Huawei's network gear, could give a major fillip to the Chinese firm's overseas expansion.
According to the deal, the value of which remains under wraps, Shenzhen-based Huawei will provide equipment to build a GSM (global system for mobile communications) network in Brazil, the largest of its kind in Latin America.
The GSM network will be run by VIVO, a joint venture between Spain-based Telefnica Mviles and Portugal Telecom, and currently the biggest mobile telecommunications operator in the southern hemisphere, serving 30 million customers in Brazil.
The entire network to be built by Huawei will adopt the Chinese firm's new-generation GSM base stations, which could be smoothly upgraded to 3G (third generation) networks.
Telefnica, which has a presence in 19 countries, is just the latest world-leading operator to turn to Huawei and ZTE Corp, also based in Shenzhen, for cost-effective solutions.
Huawei said its network gear would help VIVO cut long-term network construction costs, as well as trim its operational and maintenance expenditure.
Huawei has landed a number of deals from world-leading operators such as Vodafone Group Plc in recent months. The firm has also sold 3G equipment in the United States and Japan, where the mobile network markets are dominated by established Western manufacturers.
Huawei will construct GSM networks for Brazil's most developed coastal states, including Rio de Janeiro, Esprito Santo, Paran, Rio Grande do Sul and Santa Catarina.
Thousands of Huawei's Base Transceiver Stations (BTS) will be deployed in the first phase of the contract.
"The VIVO GSM project is one of the largest mobile projects of Telefnica in recent years. For us, the compatibility with 3G services is very important to assure its future upgrade to WCDMA/UMTS in a cost-effective way. Telefnica is very happy to further develop its relationship with Huawei in Latin America," said Telefnica Chairman Cesar Alierta.
WCDMA/UMTS is a standard for 3G telephony which offers video calls, super-fast downloading and wireless Internet access.
Huawei Chairman Sun Yafang said the deal has turned the firm into Telefnica's "key partner in the wireless area."
Telefnica has 186 million customers around the world, of which 100 million are in Latin America. Telefnica secured a place on the board of China Netcom (CNC) after it purchased a 5 percent stake in the Chinese operator in 2005.
"As the world's leading multinational telecom operator, Telefnica is very strict in selecting suppliers in terms of comprehensive ability. Huawei's leading solutions and quick-response and quality services will help VIVO to maintain its leading position in the market, and will bring its customers with more novel services and more abundant experiences," Sun said.
Huawei recorded annual sales of 45.3 billion yuan (US$5.6 billion) last year. Its contract sales hit US$8.2 billion and company officials expect the figure to climb to US$10 billion this year.
(China Daily August 22, 2006)