Nokia Siemens bags $935mn Saudi deal

Nokia Siemens Networks has won a $935 million order for a mobile network in Saudi Arabia, the firms said on Monday, while US Motorola would deliver a smaller share of the deal.

Nokia Siemens (NSN) and Motorola won the deal awarded by Kuwait's Zain telecom operator to build the whole second and third generation wireless networks in Saudi Arabia, from Ericsson and China's Huawei Technologies.

NSN, the 50-50 joint venture between the world's largest cellphone maker Nokia and Germany's Siemens, said it would also deliver managed services to Zain's Saudi affiliate over five years.

"It's a very sizeable deal. Very good news indeed for Nokia," 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."Motorola will supply us radio network (equipment), it represents 30% of the total infrastructure that we need," said Marwan al-Ahmadi, Zain Saudi Arabia's Chief Executive.

"Ericsson and Huawei were bidding for the two contracts won by Nokia and Motorola," Ahmadi told newswire Reuters in Riyadh.

Shares in Nokia were 0.4% lower at 24.57 euros by 1431 GMT, outperforming the DJ Stoxx European technology index which was down 1.6%.

"This customer has traditionally been co-operating with Ericsson," said Handelsbanken analyst Karri Rinta. "Nokia was rather late going into these markets, it seems that NSN is now getting a firmer position there."

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.

"The 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," he told a news conference in Riyadh.

Shares in Ericsson fell after the news and were 1.6% 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. (Reuters)