Nortel snags contract valued at US$300 million

Brampton, Ont.-based Nortel Networks Ltd. has won a four-year contract valued at US$300 million from wireless telecommunications provider T-Mobile USA Inc., a subsidiary of Deutsche Telecom AG.

Under the terms, Nortel will provide Global Systems for Mobile (GSM) Communications, General Packet Radio Service (GPRS), Enhanced Data Rates for GSM Evolution (EDGE), packet core for T-Mobile’s Wireless Data Network upgrades and professional services associated with the project over the next four years. In addition, Nortel will deploy core and radio access products from its wireless Univity line.

Nortel’s Univity GSM Base Transceiver Station S12000 Indoor and Outdoor radio equipment, Base Station Controllers, Internet Protocol (IP) core equipment and Mobile Switching Center will all be supplied by the company to support T-Mobile’s wireless data network infrastructure. T-Mobile will use Nortel’s products to extend its services in areas such as visual communications, two-way text messaging, Web browsing and wireless local area networks (WLANs).

Nortel, said one industry analyst, has of late been concentrating on the WLAN market because it understands that wireless hotspots represent one of the few areas telcos will spend their money over the next several years.

“Nortel is looking to where there is spending and market growth potential and WLAN hotspot services is clearly the biggest right now and it is jumping in,” said Mike Rozender, president at Rozender Consultants Int. in Oakville, Ont. He added that forecasts for the WLAN market predict it to be “ballistic over the next several years,” but he questions how the market will actually take shape in Canada.

Lawrence Surtees, director, telecom and Internet research at Toronto-based IDC Canada Ltd. agreed that WLANs are projected to be a growth area for telcos over the next two years. But more significantly, he said the Nortel deal reinforces several aspects of its operations.

“It’s good for Nortel. It proves that its wireless technology is being embraced by some of the leading service providers and more significantly it’s a contract for wireless data…it shows that Nortel is going strong in that area,” Surtees said.

The wireless market, Surtees said, continues to be a sweet spot for Nortel and the company is enjoying a distinct advantage over other equipment manufacturers, namely Lucent Technologies and Ericsson. In fact, Surtees had bold predictions for the future of Nortel.

“Nortel remains a strong and leading contender in the global telecom equipment market and it will emerge from the downturn as one of the top three of its sector,” he said. He added that in Europe, where Ericsson reigned supreme 15 years ago, Ericsson’s losses can be directly attributed to gains Nortel has made in the sector.

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