Nortel to build 3G for Telefonica

Nortel Networks [NYSE/TSE: NT] has signed a $250m deal to build out 3G networks for Telefonica Moviles SA in Spain and Germany.

Nortel is to finance $230m of the $250m contract over three years. The network rollout is scheduled to commence in Q2 2002.

Nortel will provide Telefonica with radio infrastructure equipment in Spain and a full turnkey UTRAN (radio access) solution in Germany for more than 1,000 base stations.

"The continued success of Nortel Networks in securing these vital UMTS awards follows the recent $500m award from Cingular Wireless and further demonstrates our leadership position in supplying next generation wireless networks," said Pascal Debon, president of wireless networks at Nortel.

He added: "We will work closely with Telefonica Moviles to ensure they benefit from our in-depth global experience in deploying and optimising large networks based on code division technology."

On February 12, Nortel announced a profits warning saying that weak customer demand will hit Q1 sales and it will now be very difficult for the company to meet its sales targets for the quarter.

However, Nortel says that it still expects that it will return to profit by the final quarter of 2002. Nortel reduced its workforce by almost half during 2001, including about 900 jobs cuts in its Irish operations.