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Nortel Networks wins $270M contract for China Unicom wireless Web
By GILLIAN LIVINGSTON
TORONTO (CP) - Nortel Networks, (NT) busy cutting jobs and forecasting massive record losses in recent days, announced good news for a change Thursday with two contracts for wireless infrastructure. The first deal with wireless operator China Unicom is valued at $270 million US.
No financial details were released on the second deal, with Oni Way, a wireless operator in Portugal.
The two deals are "decent" said Paul Sagawa, an analyst with Sandford Bernstein and Co. However, they are dwarfed by Nortel's announcement last week that it expects to report a second-quarter loss of $19.2 billion US.
Nortel shares closed up 46 cents to $12.76 on the Toronto Stock Exchange, ending a 12-session losing streak during which the stock fell as low as $11.75 on Wednesday.
For China Unicom, Nortel, based in Brampton, Ont., will provide switching, radio base stations and transmission equipment for mobile communications, as China Unicom aims to introduce high-speed wireless Internet services across China.
"Nortel Networks is committed to building its leadership position in delivering the high-performance wireless Internet by working closely with China's service providers," stated Robert Mao, chief executive of Nortel Networks China.
The expansion will increase the potential number of China Unicom subscribers served by Nortel systems to 11.6 million, from 7.1 million.
Nortel has announced wireless network awards in 17 of China's 31 provinces, and so far this year has signed contracts in China valued at $844 million US.
Nortel will also supply high-speed wireless Internet infrastructure equipment and services to Oni Way so it can build its network in southern Portugal, including Lisbon.
The deal will make Oni Way the first operator in Portugal to launch a high-speed universal mobile telecommunications system network, or UMTS.
Nortel has made nine UMTS deals so far this year, eight of them in Europe.
While telecom providers across the globe cut back on spending, some operators are still building wireless infrastructure.
"Wireless overall as an industry is growing this year," Sagawa said. "And Nortel's growing in wireless this year."
Other areas of Nortel's business, mainly fibre-optic network building, have slumped as telecom service providers ran into difficulties.
Geographically, "it's China and Japan that are good - they're the only two countries in the world that seem to be growing their spending," Sagawa said.
"In China it's because it's a command economy and they're trying to catch up. And in Japan it's because NTT is extremely strong," he said. "They still maintain a near-monopoly and therefore have a very strong cash flow and are in a very good economic position to make investments."
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