OXFORD, United Kingdom—Nortel executives have admitted that the US$1.1 billion contact awarded to it by MmO2 for 2.5-generation (2.5G) and third-generation (3G) infrastructure this week was a much-needed boost to its somewhat battered morale (see related news under Europe News). Having named Nortel as one of its primary infrastructure suppliers for 2.5 and 3G equipment early in 2000, U.K.-based MmO2 then shocked Nortel by placing all equipment contracts on hold while it reviewed its Europewide mobile communications investments.
The deal, which is reported to fulfill 30 percent of MmO2’s ultimate infrastructure requirements—another 30 percent has been awarded to Nokia—comes after Nortel was excluded from the earlier trials of 3G technology conducted by the cell-phone operator using NEC equipment. Scott Wickware, Nortel’s director of Universal Mobile Telecommunications System (UMTS) marketing, said the company proved it was capable of winning business from MmO2 despite not being involved with the trials or being a supplier of current-generation infrastructure to MmO2. Wickware claimed this contract now positions Nortel as a major equipment provider to four of Europe’s top five cell-phone operators.
Financial analysts said the deals MmO2 has struck with Nortel and Nokia, which call for equipment to be deployed in the United Kingdom, the Netherlands, Germany and Ireland, will allow the company to cut its capital expenditure budget by about US$860 million, or 22 percent, to about US$3.2 billion. Nortel confirmed that MmO2 will not award the remaining 40 percent of the infrastructure contract until the operator sees how successfully each company performs.
