Attendees visit the stand of ZTE during the second day of the Mobile World Congress 2016. (Photo : Getty Images)
ZTE, one of the top optical network product and solution provider worldwide, was chosen by CK Hutchison Holdings Limited and VimplelCom Limited to merge and manage their Italian mobile networks. This is a big loss to Ericsson as the company has business with both carriers before.
Xiao Ming, the head of ZTE in Europe, said, "We want Italy to become ZTE's Europe Hub. ZTE also plans to create thousands of new jobs in Italy, increasing the skills of its technicians and expanding the number of staff involved in related industries."
ZTE won the $1 billion contract against Huawei, Ericsson and Nokia Oyj. This deal will give ZTE a boost on scaling-up in its European operations. 3 Italia and Wind Telecommunicazioni SpA, both owned by CK Hutchison and VimpleCom, respectively, received European Union approval in September for their merger, which will create the largest mobile-phone network in Italy. It is said that the second-largest market for Hutchison is Italy, led by billionaire Chairman Li Ka-Shing, behind UK.
As Ericsson is not chosen, it is currently in a dire situation and could lay-off a quarter of its workforce in Italy. In October, Ericsson announced that it will slash 3,000 jobs after months of speculations regarding its poor financial results. This is to reduce manufacturing and operating costs.
It is predicted that about 1,600 of these employees are expected to take the company's voluntary redundancy packages. In addition, it also announced that about 900 of their consultants are set to depart the company. All of these problems contributed to the departure of CEO Hans Vestberg.
The contract loss puts further pressure to Borje Ekholm, the incoming CEO of the company. He will be stepping up from being one of the board-of-directors of the company for a decade. He is said to take over the CEO position in January with a task of reviving Ericsson's fortunes after one year.
