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T-Mobile taps Ericsson for major deal

The U.S. carrier awards a $500 million contract to longtime partner Ericsson to supply cell phone network equipment in new areas and bolster coverage in established markets.

Ericsson said Tuesday it has won a $500 million contract to supply cell phone network equipment to longtime partner T-Mobile USA.

T-Mobile plans to expand into new western Virginia and New England markets, plus increase calling capacity in 18 cities where it has built networks using Ericsson equipment, according to an Ericsson representative.

For Ericsson, the three-year deal is among the largest in recent memory, according to the representative. It's also welcome news just three days before the equipment maker is expected to report a second-quarter loss of 19 cents per share. In related financial news Tuesday, Ericsson's handset-making venture with Sony, Sony Ericsson Mobile Communications, reported a second-quarter net loss of nearly $100 million.

Cell phone network equipment providers are all suffering as their main customers, cell phone service providers, slow once-fervent network expansion plans. Ericsson, Nokia and Motorola won't show signs of a turnaround this week when each reports second-quarter earnings.

Before Tuesday's deal was announced, Ericsson and Nokia equipment made up 60 percent of T-Mobile's network, with Nortel Networks equipment powering the rest. It wasn't known Tuesday if that percentage would change because of the Ericsson order, or because of a four-year, $300 million contract T-Mobile announced with Nortel in May.

T-Mobile spokeswoman Kim Thompson did not return a phone call seeking comment. The deal was confirmed by a representative for T-Mobile's parent company, T-Mobile International, which is a subsidiary of Deutsche Telekom.