China Mobile signs $1billion networking deal with Ericsson

Mumbai: China Mobile, the largest mobile phone operator in China, has signed a $1 billion network contract with the world's biggest mobile network equipment provider, LM Ericsson, under which the latter will supply core and network equipment, along with related technical support and services, to expand China Mobile's GSM coverage in 19 regions in China.

The agreement, signed in Sweden at a ceremony attended by Chinese president Hu Jintao and Swedish prime minister Fredrik Reinfeldt, will equip China Mobile fight back a challenge from China Netcom, which will soon sign a GSM network deal under the state-directed telecom reforms.

China Mobile will expand its network capacity, and create new revenue streams from data and voice call services.

As of end-April, China Mobile had 321.3 million subscribers against 110.3 million for rival China Unicom.

China Mobile plans to encash on the strong appetite for mobile telephone services in the rural areas of the country where the mobile subscriber numbers have grown by 22.1 per cent last year.

Ericsson has already started deliveries on the contract to China Mobile, helping the Chinese giant defend its dominant position in the GSM market before issuing the first 3G licences.

China Mobile has also signed 2.4 billion yuan ($311.7 million) contracts with the Shenzhen-listed ZTE Corporation and its subsidiary Shenzhen ZTE Technology for constructing a TD-SCDMA network.