By Tarmo Virki, European technology correspondent
HELSINKI (Reuters) - Nokia SIEMENS (SIE.XE)Networks (NSN) has won an eight-year contract worth more than $7 billion in the United States, a deal analysts said could be the largest order ever placed in the mobile telecoms gear industry.
Under the agreement, NSN will build and operate a high-speed wireless network for Harbinger Capital Partners' new LightSquared venture.
The deal, which is still subject to final approval from both boards, comes a day after NSN said it would buy Motorola's telecom network equipment business for $1.2 billion.
Analysts said the deal and the planned Motorola unit acquisition would boost NSN in the North American market where so far it has struggled. NSN generated just 6 percent of its revenue in the last quarter from the region.
"In the U.S., big operators have so far been skeptical to outsource their business. The deal is a great reference when this starts to change," said Hannu Rauhala, an analyst with Pohjola in Helsinki.
Susan Spradley, the head of NSN's North American business, said outsourcing would likely become more popular in the U.S.
"Will this be an ongoing trend? I think to a degree it is," Spradley said.
Sprint Nextel Corp signed a $5 billion outsourcing deal with NSN's bigger rival Ericsson last year.
Spradley declined to give the names of the companies who had made it to the shortlist but said they included all the top vendors.
"This was a very hard-fought-for business," she said.
Nokia Siemens plans to use its remote network operations center in India extensively to manage the new network.
NEW FAST NETWORK
LightSquared, a newcomer to the U.S. wireless market, plans to build an open wireless broadband network using Long Term Evolution (LTE), a fourth-generation technology that transmits data at a faster rate than has been done previously and at a lower cost.
The new nationwide LTE network will consist of some 40,000 cellular base stations and cover 92 percent of the U.S. population by 2015.
Verizon Wireless, AT&T and MetroPCS have also unveiled plans to launch LTE networks in the United States.
LightSquared said its network build-out is expected to create more than 100,000 direct and indirect private sector jobs over the next five years.
The venture named former Orange executive Sanjiv Ahuja as its chairman and chief executive, and said it planned to raise up to $1.75 billion in debt and equity.
Harbinger and its affiliates have invested $2.9 billion in the venture.
The U.S. Federal Communications Commission said it in a statement it welcomed the formation of LightSquared and its investment plans.
WATERSHED DEAL?
"It has the potential to be a watershed moment in the U.S. wireless industry," said Dan Hays, a partner at management consulting firm PRTM.
Hays said LightSquared was looking for mobile virtual network operator (MVNO) partners in wireless carriers, which could include Deutsche Telekom AG unit T-Mobile USA, Leap Wireless and U.S. Cellular.
Well-known brands like Wal-Mart and Best Buy could also show interest, Hays said.
MVNOs are carriers that do not own infrastructure but rent airtime from other network owners.
Lightsquared will become a direct rival of Clearwire, which is owned by Sprint Nextel and cable companies.
Clearwire has a similar strategy of renting space on its network to partners who use it to directly market wireless services to consumers and is in the process of building a network to cover markets with 120 million people by the end of the year.
"We expect this announcement to be perceived as negative for Clearwire in particular and wireless providers in general as there is investor desire for fewer, not more, players in the space," Wells Fargo Securities analyst Jennifer Fritzsche wrote in a note to clients.
"We would note, however, that Harbinger is starting from nothing and it will take a long time before it had a presence in the market," she added.
NSN -- whose key rivals in the United States are Ericsson and Alcatel-Lucent -- is a 50-50 venture of Nokia and Siemens.
(Additional reporting by S. John Tilak in Bangalore and Sinead Carew in New York; editing by Karen Foster and Vinu Pilakkott)