Ericsson wins China Mobile managed services contract

Sweden’s Ericsson has won a substantial managed services contract from China Mobile, on the home turf of its leading competitor in the infrastructure supply business, Huawei. The deal will see Ericsson providing field maintenance services for China Mobile’s operation in the Hebei province in Northern China.

Ericsson said that the deal, which will see the firm responsible for 22,000 GSM/TD-SCDMA base station sites in the regional network, which serves 35 million customers, represents the largest managed services win for the firm in China to date. The contract covers a three-year period and Ericsson has already begun to deliver services, the Swedish firm said.

Mats H Olsson, president of Ericsson China & North East Asia, said: “This shows China Mobile Hebei’s trust in Ericsson’s industry leading managed services capabilities and its willingness to be a strategic partner with Ericsson in China. We are confident of providing the best-in-class services to China Mobile Hebei and to help it capture new opportunities in this challenging and competitive marketplace.”

As Huawei and, to a lesser degree, ZTE strengthen their position in the global infrastructure supply market, incumbent Western vendors are  increasingly looking to their services arms to drive new and more stable revenue streams. Ericsson derives one third of its revenue from managed services. Strong managed plays offerings are still missing from the portfolios of the Chinese vendors and both have made the development of such plays a strategic priority.

China is a vitally important market for Ericsson, which won its first business in the market in 1892. In May the firm held its annual Business Innovation Forum in Shanghai, where Olsson described China as “already an ICT superpower”. Government involvement in improving the country’s communications infrastructure will be essential, Olsson said, citing RMB400bn that the Chinese Government has set aside for a stimulus package through to 2011. “China is becoming more and more influential in shaping the global communications market, with standards like TD-SCDMA and TD-LTE,” he said.

Informa forecasts that China will be home to 840 million mobile subscribers by the end of 2010, hitting one billion by 2012.

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