Nokia Siemens beats Huawei in TeliaSonera LTE deal

The German headquarters of Nokia Siemens Networks is pictured in Munich November 4, 2009.

HELSINKI (Reuters) - Nokia's network gear making arm Nokia Siemens won part of the key next generation LTE network contract on Wednesday from Nordic operator TeliaSonera, surprisingly beating Chinese rival Huawei.

Ericsson is the other supplier for the TeliaSonera's networks in Norway and Sweden.

Huawei, known for its aggressive pricing, was seen as the primary candidate to win part of the deal after TeliaSonera used it, together with Ericsson, in its original rollout in the capitals of the two countries.

Shares in Ericsson were 1.2 percent higher at 69.50 crowns in Stockholm by 1225 GMT, while Nokia stock was 1.2 percent higher at 9.12 euros in Helsinki.

The equipment vendors are battling for the first major orders for the next generation LTE (Long Term Evolution) networks -- something they can use as a reference to win new orders.

Telecoms operators are expected to spend billions of euros on LTE networks as data traffic in their current networks has exploded due to the surge in take-up of mobile data cards.

Nokia Siemens has seen its market share slide lately, and it fell behind Huawei in the third quarter of last year, according to research firm Dell'Oro.

Analysts said the win marked the first major victory of Nokia Siemens' new, more aggressive strategy under new chief executive Rajeev Suri.

"This win is an important milestone for NSN in delivering on its new strategy," said Pal Zarandy from Rewheel consultancy.

"It gives the message to the market that not only their portfolio matches the key technology selling points of the Chinese but that NSN is also ready to match Huawei's commercial flexibility," he said.

A TeliaSonera spokesman said it made the decision on "commercial reasons" while vendors offerings were technically similar.

"Huawei have probably sold the first part at an unrealistically low price," said John Strand, chief executive of telecoms consultancy Strand Consult.

Ericsson is considered to be the leading player in LTE technology, but Alcatel-Lucent, Huawei, Motorola and Nokia Siemens have also won major LTE orders.

TeliaSonera will continue to use Huawei's LTE gear in Oslo.

(Additional reporting by Helena Soderpalm in Stockholm; Editing by Jon Loades-Carter)