$1 bln GSM mega-deal between Ericsson and China Mobile

Ericsson signed a GSM expansion framework agreement on Sunday with China Mobile, valued at about USD 1 bln, at a ceremony in Sweden attended by Chinese President Hu Jintao.

The Chinese President was in Sweden on a state visit at the invitation of King Carl XVI Gustaf – the first visit by a Chinese president since the two countries established diplomatic relations in 1950.

President Hu Jintao was joined at the signing ceremony by Swedish Prime Minister Fredrik Reinfeldt, Wang Jianzhou, Chief Executive of China Mobile Communications Corporation, and Carl-Henric Svanberg, President and CEO of Ericsson.

Svanberg says: “Ericsson is proud of its cooperation with China, which dates back over a century. We are dedicated to supporting the development and growth of China‘s telecom industry with our global expertise and proven competence.”

Ericsson’s involvement with the Chinese telecom industry began in 1892 when it received the first order from China. In 1894, 2,000 Ericsson telephone sets sailed across the oceans to Shanghai, signalling the start of Ericsson’s role as China‘s telecom provider.

Since then, Ericsson has been actively contributing to China’s economic development and the rapid growth of the Chinese telecom industry, while taking part in many “firsts” in the country, such as China’s first manual switchboard in service (1900), first automatic exchange in service (1924), first digital exchange (1981) and first analog mobile communications system.

Ericsson’s commitment to operations in China is reflected by its continuous increase in local sourcing, up to USD 2.5 bln in 2006, and growing export opportunities, with USD 1.6 bln in exports last year.

Under the new framework agreement, Ericsson has already started delivery of core and radio network equipment, along with related technical support and services, to expand China Mobile’s GSM coverage in 19 regions.

The expansion project will allow China Mobile to boost network capacity and performance, creating new revenue streams from enriched data services and offering an enhanced user experience to hundreds of millions of its subscribers.

China Mobile is the leading mobile services provider in China, with the world’s largest mobile subscriber base of 301.2 mln and unified, contiguous all-digital mobile network. It was listed on both the New York Stock Exchange and The Stock Exchange of Hong Kong Ltd in 1997. 

A second major signing ceremony, between Sony Ericsson joint venture and China Postel Mobile Communications Equipment (China Postel), a subsidiary of China National Postal and Telecommunications Appliances Corporation (PTAC), also took place.

Tan Xinghui, President of PTAC and Chairman of China Postel, Carl-Henric Svanberg, in his capacity as Chairman of the board of Sony Ericsson, and Gunilla Nordstrom, President of Sony Ericsson China, witnessed the agreement for USD 600 mln of mobile phone purchasing.

China Postel, a subsidiary of China National Postal and Telecommunications Appliances Corporation, is the largest handset retail company in China, with market share of 30% in 2006. China Postel has set up a strong and well-positioned channel network across China from distribution to retailers and repair shops. The cooperation between Sony Ericsson and China Postel dates back to 1997, when China Postel began its cooperation with Sony Ericsson’s parent company Ericsson.

Sony Ericsson also recently announced a Memorandum of Understanding with Shenzhen Telling Communications Corporation for mobile phone purchasing valued at more than USD 500 mln.

Since it was established in September 2006, STCC has developed into one of the largest and most influential telecom distributors in China. It is a national distributor of Sony Ericsson and other mobile phone manufacturers, and is an authorized repair agent for a number of brands.