Ericsson, Alcatel win 4G telecoms deal from AT&T

The exterior of Ericsson's headquarters are seen in Stockholm in this April 30, 2009 file photo.

STOCKHOLM/PARIS (Reuters) - U.S. telecoms carrier AT&T has picked Ericsson and Alcatel-Lucent to build its new LTE high-speed wireless network, consolidating their leading position in the U.S. market.

The companies did not give the value of the deal, but telecoms consultancy Aircom has estimated building the Long Term Evolution (LTE) network could cost $1.78 billion during the first 12 months in the U.S. for an operator like AT&T.

Equipment vendors are battling for the first major orders for LTE networks, which will make it easier for them to win subsequent deals.

LTE technology, or 4G, offers cheaper operating costs and enables fast uploads and downloads of movies, music and other data to mobile devices.

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

Shares in Ericsson were flat at 1410 GMT, while Alcatel shares were 1.4 percent higher.

Loss-making Alcatel-Lucent has long been a smaller player in mobile, behind Ericsson, Nokia-Siemens Networks, and Huawei.

Its market share has been slipping, and some analysts have questioned whether the wireless business is structurally loss-making and should be sold off.

Alcatel Chief Executive Ben Verwaayen is betting that Alcatel-Lucent can turn around its flagging mobile fortunes with LTE, and has long ruled out exiting wireless.

"LTE is very important to us, and our CEO has made that very clear in the past 16 months," said Alcatel-Lucent executive Kenneth Frank. "It will be a critical measure of the company's success."

KEY PLAYERS IN U.S.

AT&T's rival Verizon is using the same vendors to roll out its network later this year, while AT&T's LTE network is scheduled to start operations in 2011.

Ericsson said the deal would have no major impact in 2010.

"In 2011 there will be more substantial deliveries," Ericsson Networks head Johan Wibergh said.

"In 3G Ericsson has a more than 40 percent market share world wide, and we certainly have the ambition to have as least as much market share in LTE," he added.

Evli analyst Michael Andersson said the win, which broadens Ericsson's footprint clearly in the U.S. had been expected.

"The U.S. operators need to expand capacity in their existing networks and they are increasingly choosing to move to the technology where Ericsson is major player. That Ericsson guns for a 40 percent market share sounds pretty realistic," he said.

AT&T has said it is waiting longer than Verizon to upgrade its network to LTE because it wants enough high-speed LTE devices to be available when it launches.

It has also said that it could get more speed upgrades out of its existing network than Verizon would from its network, as they currently use different technologies.

AT&T is already bumping up its network spending this year as it looks to overcome strains caused by high data usage, particularly from iPhone customers.

TeliaSonera opened the world's first commercial LTE service in the two Scandinavian capitals Stockholm and Oslo in late 2009.

(Reporting by Sven Nordenstam and Asa Wallentin in Stockholm, Sinead Carew in New York and Leila Abboud in Paris; Writing by Tarmo Virki, editing by Elaine Hardcastle and Louise Heavens)