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Nortel wins $300 million T-Mobile deal

T-Mobile USA will use Nortel Networks' base stations to improve network performance in New York, Chicago and other major markets.

Nortel Networks has won a four-year, $300 million contract to supply cell phone provider T-Mobile USA with cellular network equipment.

T-Mobile will use Nortel's Univity base stations to improve network performance in New York, Chicago and other major markets, Tim Wong, chief technical officer of T-Mobile USA, said Wednesday.

These sorts of partnerships are becoming increasingly rare as major U.S. phone companies reduce spending. Equipment suppliers Nortel, Lucent Technologies and Ericsson have been hit hard by the economic slowdown.

"It's been awhile since we've seen a $300 million deal," a Nortel representative said. "It's a pretty significant deal in today's market."

T-Mobile has three main suppliers of network equipment: Nortel, Ericsson and Nokia. Before the deal, Nortel supplied T-Mobile with about 40 percent of the hardware in its network. A combination of Nokia and Ericsson gear made up the balance.

As a result of the partnership, Nortel is gaining more ground. A source familiar with the deal said some of Nortel's base stations will displace T-Mobile's equipment in some second-tier markets.