Alcatel-Lucent has secured 4.53 billion Yuan with China Mobile and 3.59 billion Yuan with China Unicom in two separate contracts to bring the Chinese infrastructure in line with the country's industry and information technology guidelines by 2017.
China Mobile (NYSE:CHL), along with China Unicom, has reached two separate agreements with Alcatel-Lucent for the upgrade of networks for telecommunication providers for a value totaled at $8.12 billion. According to breakdown of the details, the French telecom giant secured agreement worth 4.53 billion Yuan and the China Unicom contract is valued at less than $4 billion. Both contracts have duration of two years and cover fixed broadband access, optical networking functions, as well as software-defined networking amongst others.
Alcatel-Lucent said that it would support the Chinese organizations in their endeavor to meet the “Broadband China” initiative, which is set by the Chinese government to increase broadband coverage throughout the nation by the end of this decade, i.e. 2020.
By the year 2017, according to guidelines set by the Ministry of Industry and Information Technology, households in developed and underdeveloped areas will have access to 100Mbps of broadband, whereas residents of mainstream cities will see broadband services of 30Mbps. Fiber optics are expected to cover 80% of administrative villages, on top of rural and urban areas expected to have 4G coverage.
The deal is seen as key for China Unicom’s. The cloud unit of China Mobile is already in a partnership with US-based Akamai Technologies to help Chinese businesses expand web presence on the global scale. It comes on top of China Mobile recording its biggest decline in profits since the turn of the 21st Century, attributed mostly to its huge expenditures on network development.
Alcatel-Lucent snapped up other contracts with the same companies last year, in areas of Ethernet core routing, as well as being selected in two regions to supply five routing equipment to China Telecom. The strong focus on the Asia Pacific region is evidenced from financial reports showing that it was the only region where the French telecom equipment provider has been able to increase revenues in the Q3 results, clocking in more than 720 million euros, and a massive rise of more than 22%.
To be clear, Alcatel-Lucent will cease trading under its current name, and will instead be named as the Nokia Corporation, on the back of a memorandum of understanding between the two sides to merge by early 2016, as part of a $15.5 billion deal.
China Mobile’s stock price ended the day at $64.66, a gain of 1.20% the previous day. The company has little amount of time remaining before it starts trading as Nokia Corporation.
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