ZTE wins Hutchi­son, Vim­pelCom Ital­ian deal

China Daily (Hong Kong) - - BUSINESS - By BLOOMBERG

CK Hutchi­son Hold­ings Ltd and Vim­pelCom Ltd se­lected Chi­nese sup­plier ZTE Corp to merge and man­age their Ital­ian mo­bile net­works in a blow to Eric­s­son AB, which has busi­ness with both car­ri­ers.

“We want Italy to be­come ZTE’s Europe hub,” the com­pany’s head of Europe, Xiao Ming, said in an emailed state­ment. ZTE also plans to cre­ate “thou­sands of new jobs” in Italy, in­creas­ing the skills of its tech­ni­cians and ex­pand­ing the num­ber of staff in­volved in re­lated in­dus­tries, Ming added.

The con­tract is val­ued at about $1 bil­lion, peo­ple fa­mil­iar with the mat­ter said last week. ZTE won the busi­ness in com­pe­ti­tion with Huawei Tech­nolo­gies Co, Eric­s­son and Nokia Oyj, they added. Eric­s­son cur­rently man­ages Hutchi­son’s net­work and part of Vim­pelCom’s, ac­cord­ing to one of the peo­ple.

The deal gives ZTE, based in Shen­zhen, a boost as it tries to scale up its Euro­pean op­er­a­tions. Hutchi­son’s 3 Italia and Vim­pelCom’s Wind Tele­co­mu­ni­cazioni SpA re­ceived Euro­pean Union ap­proval in Septem­ber for their merger, which will cre­ate Italy’s largest mo­bile-phone net­work. Italy is the sec­ond-largest mar­ket for Hutchi­son, led by bil­lion­aire Chair­man Li Ka-shing, be­hind the UK.

The loss of a big ser­vices con­tract in Italy puts fur­ther pres­sure on Eric­s­son’s in­com­ing CEO Borje Ekholm, who will take the helm next month af­ter spend­ing a decade on the Stock­holm-based com­pany’s board. Ekholm has been tasked with re­viv­ing Eric­s­son’s for­tunes af­ter a year in which it has ousted one CEO as it strug­gles to adapt to lower re­gional de­mand for phone net­works.

Eric­s­son de­clined to com­ment and re­ferred ques­tions on the re­sults of the ten­der to the car­ri­ers.

The merged com­pany, which will take on ri­vals Tele­com Italia SpA and Voda­fone Group Plc’s lo­cal unit, chose ZTE based on tech­nol­ogy more than on price, the peo­ple said.

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