Alcatel-Lucent has bagged a $1.7 billion order from Chinese telecom operators, which could boost its expansion in one of the most lucrative telecom markets and shield it from the global economic slowdown.

The Franco-American telecom gear maker is expected to announce the deal today, according to industry sources.

Alcatel-Lucent will provide third generation (3G) network equipment for China Mobile and China Telecom, sources said.

The deal comes on the heels of a similar supply contract between Alcatel-Lucent and China Unicom announced in March.

The contracts with China Mobile and China Telecom are part of a slew of deals signed between a Chinese trade mission and the United States.

The deals mark a big win for Alcatel-Lucent in its competition with Ericsson and Nokia Siemens Networks as well as its rising Chinese rivals Huawei Technologies and ZTE Corp which have been undercutting the established Western giants with cheaper products.

"The drive for 3G (in China) is a very important stimulus for what I think is a very exciting market to come," Ben Verwaayen, chief executive of Alcatel-Lucent, told reporters in Beijing yesterday.

"If you look to the market and the economic crisis today, it is good to see that China is going to play a more prominent role than ever before."

Verwaayen said Alcatel Lucent's business in China will "only grow forward" in the next few years due to the country's strong economy and the Chinese government's efforts to initiate the new wireless technology.

Telecom gear makers are now increasingly looking at China as a strategic market as the economic downturn has hit investment budgets of most of the global operators.

In stark contrast, Chinese operators are expected to spend a total of 400 billion yuan ($58.48 billion) on 3G networks over the next three years.

Underlining the growing importance of China, Alcatel-Lucent will have a global board meeting in Shanghai later this month, the first time such a meeting has been held outside Paris and New York, Verwaayen said.

He said Alcatel-Lucent is best positioned to take a large portion of the 3G orders as the company makes gear which supports all the three 3G standards, including China's home-grown TD-SCDMA.

(China Daily April 28, 2009)