Telenor ties could mean big money for Huawei
* Telenor sees Huawei as its main 4G partner in Norway
* Huawei upgrades to take "big percentage" of Telenor capex
* Weighing bids for India 3G spectrum on selective basis
* Sees LTE commercialisation in North Europe in 2010
(Adds details)
By Doug Young
HONG KONG, Nov 19 (Reuters) - Norway's Telenor (TEL.OL) said its new tie-up with Huawei Technologies [HWT.UL] could pave the way for a relationship worth billions of dollars down the road, in a watershed for the Chinese company's global ambitions.
In a major shift, Telenor effectively dumped its primary longtime equipment suppliers Ericsson (ERICb.ST) and Nokia Siemens Networks [NSN.UL] this month when it chose Huawei to build its fourth-generation (4G) mobile network and modernise its existing infrastructure. [nL5381188]
Telenor CEO Jon Fredrik Baksaas told Reuters the deal could be a lucrative one for Huawei, which his company now considers its partner in developing a next-generation 4G network based on a technology known as Long-Term Evolution (LTE).
"This is a long-term contract, more than five years," Baksaas said in an interview on Thursday on the sidelines of a telecoms show in Hong Kong. "The overall picture is we invest on an annual basis about 10 percent of sales in capex in Norway. A good percentage of that will be allocated to modernisation."
He said Telenor, which also operates services in a number of developing markets in Asia and Eastern Europe, allocated about 3 billion Norwegian crowns ($537 million) per year for capital expenditure in Norway, but the relationship could eventually expand beyond the company's home market.
"This is a significant contract," he said. "From Huawei's perspective, the prospects for Huawei to take it into other markets is a potential."
LTE ROLL-OUT
Baksaas said a number of companies are trialing LTE technology in Norway and Sweden, and could move on to commercial use as soon as next year. "Towards the end of next year, I think you will see some commercial initiatives on LTE in the Scandanavian market, including from our side," he said.
Huawei has risen from relative obscurity over the last decade to become the world's second-largest mobile equipment seller, surpassing Nokia Siemens Networks this year to trail only Ericsson.
It has made significant progress in Europe, counting the likes of TeliaSonera (TLSN.ST) and Vodafone (VOD.L) among its clients there. It has been less successful in the United States, but is actively lobbying leading U.S. carriers Verizon (VZ.N) and AT&T for contracts for their next-generation LTE networks when those carriers move ahead with 4G. [nLH614453]
For its part, Telenor is pushing ahead with plans to launch mobile service in India as part of its broader emerging markets strategy that also includes investments in Pakistan, Ukraine and Russian mobile carriers.
Baksaas said his company is still on track to open its India network, based on second-generation technology, by the end of this year. He added Telenor could bid for some 3G spectrum when India holds its 3G auctions set for January, but is not aiming to build a nationwide 3G network.
"We will not participate in a nationwide auction process," he said. "We could possibly bid for licences in some of the regions."
($1=5.587 Norwegian Crown)
(Reporting by Doug Young; Editing by Jacqueline Wong)
((doug.young@thomsonreuters.com; +852 2843-1631; Reuters Messaging: doug.young.reuters.com@reuters.net))
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