Big news for Alcatel-Lucent today, as Telefónica Spain selected Alcatel-Lucent to deliver a 4G LTE network overlay. A contract that will deploy 8,000 4G LTE Base Stations (BS) and is the largest 4G LTE agreement for Alcatel-Lucent in Western Europe to date. Traditionally Alcatel-Lucent’s customer base was in France, North America and China, but now this contract becomes an opportunity to build momentum and maintain its strong LTE global leadership position during 2013.
As we are moving from 2012 to 2013 lots of changes are expected in the lower vendors’ positions but without any serious changes in the top-5 LTE vendors list. Vendors that heavily depend on Tier 1 operators will maintain position but will experience small decline in market share due to the operators’ pressure from ARPU and regulators but also completed or almost completed LTE deployments. However, Huawei, Alcatel Lucent, Samsung and ZTE are expected to be the protagonists, gaining market share and momentum in 2013.
Before briefly discussing the LTE market is worth to mention the China Mobile $6,7B tender that is going to reweight the 2013 but mostly the 2014 LTE market. The telco aims to cover more than 100 cities with its LTE network by the end of the year and it will need as many as 200,000 LTE base stations to reach that goal which makes it the largest tender ever. According to insiders, China Telecom granted its LTE tender bids to more than 10 equipment vendors in August. The tender content includes two technologies (TD-LTE and FDD-LTE), vendors should give response before September 22. The Ministry of Industry and Information is going to have the final word and approval to the TD-LTE or FDD-LTE or a combination of the two.
In details, Huawei says to be the biggest winner, being selected to supply devices in all category types, followed by ZTE. Ten Chinese vendors including Huawei, ZTE, Datang and UTStarcom will provide a combined 150,000 units of MiFi wireless Wi-Fi modems. Huawei and UTStarcom, together with Alcatel-Lucent Shanghai Bell and Dafu Computer (Changshu) Co Ltd will also supply the pool of 30,000 units of data cards. Huawei, ZTE and Dafu Computer (Changshu) Co Ltd will also provide 20,000 units of CPE.
Although, Ericsson is absent in the Chinese deal, it will still remain the LTE global leader in 2013, but its share is predicted to decline. Ericsson’s commanding lead came not only from its strong customer base (5 out of 7 Tier 1 North American operators all 3 Japanese and 3 South Korean operators) but also by helping during the past 2-years operators to modernize their RANs. Ericsson was taking lots of these contracts helping operators to transit to efficient single LTE RANs, assisting with LTE commercialization and even more the justification process. But the continuous ARPU pressure, regulation on CAPEX spending, the overall crisis is expected to affect its customer base. On the other hand NSN after Motorola Networks acquisition has taken contracts with T-Mobile USA, BCE and Telus plus 6 of the Tier 1 operators in Japan and South Korea. It is estimated that NSN will remain in the same level with 2012 or experience a very small decline since most of its customers have completed their deployment.
Huawei has lower value contracts compared to Ericsson and NSN. The fact that it has been prevented from entering the North American market is still a drawback, although it counts more than 100 contracts but in small scale. Lots of Tier 2 and 3 operators in markets like Africa and Middle East generate lower revenues compared to the top-2 leaders. However Huawei is expecting to gain more momentum from LTE contracts in Europe and China (China Mobile as described) as they will ramp up their investments.
Samsung is the disrupter in this LTE market or even the 2013 outsider, gaining more than 10 LTE contracts in India, Europe, Chile, Latin America, gained momentum in 2012, and its LTE market share will go up in 2013. Fujistu and NEC are very dependent on Japan but they might start partnering with other vendors and integrators to enter new markets. NTT DoComo and KDDI are almost completed with the LTE deployment, adding more BS to existing site or supplementing macros with small cells.
Closing, although ZTE is a lagger, it is expected to surpass NEC and Fujitsu in 2013. It heavily depends on pretty large amount of contracts but in smaller scale, in developing markets. In 2013 and moreover in 2014, it expecting a boost up from China Mobile tender, since it shares a large portion of that tender with Huawei.