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Ericsson and Nokia Siemens Networks struck back on Wednesday in their intensifying battle with Huawei of China when TeliaSonera chose the European groups to build its fourth-generation wireless network in Sweden and Norway.
The contract was a crucial win for Ericsson in its home market after recent breakthroughs by Huawei in the Nordic region highlighted the growing competitive challenge posed by China’s biggest network equipment supplier.
Huawei was considered a serious contender to win at least part of the contract after it was picked by TeliaSonera in 2009 in to build a 4G test network in Oslo in tandem with an Ericsson test network in Stockholm.
Instead, the Nordic operator awarded the core network contract to Ericsson, while choosing NSN, a joint-venture between Nokia of Finland and Siemens of Germany, to provide part of the radio network.
For NSN, the success promised to improve morale and reassure investors after its owners each reported big writedowns on their stakes in the joint-venture last year amid declining sales and market share.
Huawei overtook Alcatel-Lucent, the Franco-US group, in 2009 to become number three in the industry after Ericsson and NSN. It underlined its growing strength by winning 4G contracts with Telenor of Norway and Tele2 of Sweden in the home region of its bigger rivals.
TeliaSonera is 37 per cent owned by the Swedish government and 13 per cent by the Finnish government. But Lars Klasson, the operator’s vice-president of wireless services, insisted Ericsson and NSN had not been given any advantage.
He said: “We already use Huawei as a supplier in Finland so we would have had no problem picking them. It was a purely commercial decision.”
Mr Klasson said Huawei’s test network in Oslo had performed well since TeliaSonera launched the world’s first commercial 4G service in the Norwegian and Swedish capitals last month. “We are satisfied with what [Huawei] provided in Oslo. It was a tough decision but Ericsson and NSN really wanted this contract.”
He said 4G services would be expanded to other Swedish and Norwegian cities later this year.
Mikael Backstrom, head of Ericsson’s Nordic business, said the win underlined the group’s leadership in the Long Term Evolution (LTE) networks expected to deliver the next generation of mobile phone and internet services. The Swedish group has already won contracts with Verizon and Metro PCS of the US and Japan’s NTT DoCoMo.
The TeliaSonera deal represented an early success for Hans Vestberg, who formally took over as Ericsson chief executive last week, after Carl-Henric Svanberg stepped down to become chairman of BP. Mr Vestberg said in December that he would extend the group’s market leadership in spite of the challenge from Huawei.
Huawei, which has been accused by rivals of aggressive pricing on contracts, claimed that Ericsson had undercut it on the TeliaSonera deal. While highlighting how it would continue to provide LTE equipment to TeliaSonera in Oslo, Huawei said in thinly veiled reference to Ericsson: “TeliaSonera has selected an alternative vendor to roll out a second stage of this deployment due to the lower commercial terms offered by that vendor.”