Ericsson takes a hit in China Mobile’s latest 5G contract awards… and Nokia gets a slice of the pie
- Ericsson lands only 2% of latest China Mobile 5G contract award
- China Mobile awarded most of business to Huawei
- But Nokia gets a cut, its first 5G RAN business in China
Only days after Ericsson President and CEO Börje Ekholm warned that its business in China was set to nosedive due to geopolitical forces beyond its control, the Swedish vendor has announced it has won just 2% of China Mobile’s latest 5G radio access network contracts, compared to the 11% cut it was previously awarded. (See For Ericsson, China crisis overshadows massive 5G deal at Verizon.)
China Mobile is building a nationwide 700 MHz 5G network in partnership with China Broadcasting Network (CBN), which was awarded the country’s fourth 5G license, for the 700 MHz band, late last year. (See China’s 5G expansion adds fuel to 700 MHz fire.)
Now it has awarded the contracts for that massive rollout and, as expected, Huawei has landed the lion’s share of the contract awards, about 60% of all the kit deals that are believed to be worth up to $6 billion in total, despite quoting higher prices than its rivals, reports the South China Morning Post.
Huawei’s local rival, ZTE, appears to have won a hefty 30% of the contracts, leaving slim pickings for other vendors, with Ericsson coming off worst.
The Swedish vendor noted today in this announcement that in China Mobile’s previous 5G RAN contract awards, it landed a decent slice of the pie, but not this time: “Ericsson has been awarded 2% market share,” of the 700 MHz RAN contracts, it noted, a share that is “materially lower” than the 11% it won from China Mobile in the operator’s second round of 5G RAN deals for 2.6 GHz rollouts.
Ericsson noted that China Mobile is the first of the Chinese operators to announce 5G RAN contract awards in the new tender rounds, and that, “given the context and based on the bidding rules, should Ericsson be awarded business in China Unicom and China Telecom we believe it would be in a similar range as with the China Mobile award.”
And to slam home the message that this is all to do with geopolitics, and not the quality of its technology or pricing, the vendor added that “the risk of lower market share award follows the decision by the Post and Telecommunication Authority (PTS) to exclude Chinese vendors’ products from the 5G auction in Sweden.”
While for Ericsson the current round of contracts is a relative disaster, for Nokia it could be regarded as a success: After failing to win any 5G RAN business in China in previous tenders because it was unable to compete while its products were mainly based on high-cost FPGA components, the Finnish vendor (via its local Nokia Shanghai Bell unit) picked up an unspecified “small sliver” of business, according to the South China Morning Post report.
Nokia has been rebuilding its 5G RAN portfolio based on its own ReefShark chipsets to make them more competitive, and that ongoing process now appears to be paying off: Any business with the Chinese operators will be seen as a welcome bonus for the vendor, which recently announced that it “expects” to raise its full year financial guidance due to a strong second quarter performance. The China Mobile sliver will only add to the growing mood of optimism at Nokia HQ.
- Ray Le Maistre, Editorial Director, TelecomTV
Stay up to date with the latest industry developments: sign up to receive TelecomTV's top news and videos plus exclusive subscriber-only content direct to your inbox – including our daily news briefing and weekly wrap.