HELSINKI/RIYADH, Jan 7 (Reuters) – Nokia Siemens Networks has won a $935 million order for a mobile network in Saudi Arabia, the firms said on Monday, while U.S. Motorola would deliver a smaller share of the deal.
Nokia Siemens (NSN) and Motorola won the deal awarded by Kuwaitâ€™s Zain telecom operator to build the whole second and third generation wireless networks in Saudi Arabia, from Ericsson and Chinaâ€™s Huawei Technologies.
NSN, the 50-50 joint venture between the worldâ€™s largest cellphone maker Nokia and Germanyâ€™s Siemens, said it would also deliver managed services to Zainâ€™s Saudi affiliate over five years.
â€œItâ€™s a very sizeable deal. Very good news indeed for Nokia,â€ said eQ analyst Jari Honko. Its the largest deal in the nine-month history of Nokia Siemens.
Motorola won a contract to supply some of the radio network, but Zain declined to give its value, saying it would be announced in due course.
â€œMotorola will supply us radio network (equipment), it represents 30 percent of the total infrastructure that we need,â€ said Marwan al-Ahmadi, Zain Saudi Arabiaâ€™s Chief Executive.
â€œEricsson and Huawei were bidding for the two contracts won by Nokia and Motorola,â€ Ahmadi told Reuters in Riyadh.
Shares in Nokia were 0.4 percent lower at 24.57 euros by 1431 GMT, outperforming the DJ Stoxx European technology index which was down 1.6 percent.
â€œThis customer has traditionally been co-operating with Ericsson,â€ said Handelsbanken analyst Karri Rinta. â€œNokia was rather late going into these markets, it seems that NSN is now getting a firmer position there.â€
Telecom equipment makers, like Nokia Siemens and Ericsson, are suffering as operators in Western countries curb investment and competition for large deals in emerging countries intensifies.
This has pushed prices so low that vendors have started to walk away from some deals.
Walid Moneimne, Nokia Siemens Chairman for the Middle East and Africa, said markets in this region promise huge revenues for equipment suppliers in the medium-term.
â€œThe number of mobile phone users in this region (Middle East and Africa) is expected to double from 300 million to 600 million by the end of 2010,â€ he told a news conference in Riyadh.
Shares in Ericsson fell after the news and were 1.6 percent lower at 13.96 crowns in Stockholm.
The two contracts will provide Zain Saudi Arabia with a network capable of managing up to 8 million mobile phone users, Ahmadi said. Zain Saudi Arabia, which paid the Saudi government $6.1 billion in fees for the mobile licence, will begin commercial operations this year.
(Additional reporting by Agnieszka Flak and Terhi Kinnunen in Helsinki, Adam Cox in Stockholm and Ulf Laessing in Kuwait; editing by Sue Thomas/Rory Channing)