Huawei Wins at TIM

Telecom Italia SpA (NYSE: TI) has awarded a high-speed downlink packet access (HSDPA) contract to Huawei Technologies Co. Ltd. , in a deal that analysts say highlights the Chinese vendor's transition to becoming a key supplier to tier-one mobile operators in Europe. (See TIM Picks Huawei HSDPA.)

The Telecom Italia win follows a 3G expansion contract last month from Vodafone España S.A. (See Huawei Wins Vodafone Deal.)

Heavy Reading senior analyst Patrick Donegan says that the deal with Telecom Italia is significant for Huawei and shows that "they are beginning to make inroads into the large European carrier account base."

"In significant part, these operators are bringing Huawei in as a means of reducing pricing on the part of their incumbent RAN [radio access network] suppliers," says Donegan. "But it's important to note that among the large carriers, [Huawei's] RAN footprint is still less than 10 percent per account."

For Telecom Italia's mobile operator Telecom Italia Mobile SpA (Milan: TIM), Huawei will expand the HSDPA network in Southern Italy, including the Sicilian capital Palermo. Huawei will deploy its new generation node B solution, which supports HSDPA, HSUPA (high-speed uplink packet access), and IP RAN. According to the analyst team at Dresdner Kleinwort , the contract calls for 1,000 base stations.

"Telecom Italia Mobile is the latest to succumb to Huawei's price-product combo... much to the likely chagrin of incumbent suppliers [Nokia Siemens Networks ] and Ericsson AB (Nasdaq: ERIC)," says the analyst team at Dresdner Kleinwort. (See Ericsson Extends TIM Deal.)

Dresdner considers TIM, alongside Vodafone, as the "European benchmark purchaser of mobile technology and services."

In Spain, Huawei will expand Vodafone's HSDPA network in seven cities, including Barcelona and Madrid. Huawei was already a supplier to Vodafone in Spain. In August 2006, the operator chose the vendor to build out its WCDMA radio access network in certain Spanish cities. (See Vodafone Selects Huawei.)

Huawei's relationship with Vodafone goes back to November 2005 when the operator gave the vendor the status of approved supplier. In March 2006, Huawei won a contract to supply UMTS radio access network to Vodafone in the Czech Republic. (See Huawei Meets Vodafone's Needs and V'fone Czechs Out Huawei.)

Also last month, Vodafone presented Huawei with an Outstanding Performance Award at the operator's second annual Global Supplier Conference. (See Huawei Gets Vodafone Award.)

Whether it's due to price, performance, or both, two big European mobile operators find Huawei's WCDMA and HSDPA equipment compelling. From Dresdner's point of view, the analysts are most interested in "operators' ability to further lower capex costs while simultaneously adding more network capacity for new bandwidth hungry data services."

— Michelle Donegan, European Editor, Unstrung