STOCKHOLM : Telecoms giant Ericsson said on Wednesday it had won a US$2 billion order from India's Bharti Airtel to expand its network into rural areas, the largest order ever received by the Swedish company.

Under the agreement, worth 1.45 billion euros, Ericsson will expand Bharti's GSM/EDGE network, it said in a statement.

"It is Ericsson's largest deal to date," it said.

The Swedish group will design, plan, deploy and manage Bharti Airtel's GSM network across 15 regions in India as well as its pan-India pre-paid platform across 23 regions.

India is one of the world's fastest-growing mobile telephony markets, and Bharti Airtel is India's top mobile services company with more than 42 million customers.

The new network "will further allow us to offer more innovative products and solutions in the areas of voice and data such as community-based charging, location-based services and enterprise VPN services," Bharti chief executive Manoj Kohli said.

The deal is the second big network expansion agreement signed by Bharti in a month.

It comes on the heels of a US$900 million memorandum of understanding that Finnish-German telecom networks manufacturer Nokia Siemens struck earlier in July with Bharti to expand its network.

Bharti Airtel was founded in 1995 as mobile telephony was being introduced in India. It shares its infrastructure with India's Reliance Communications and other rivals as it seeks to reach more of the population.

Right now, India's mobile revolution is mainly confined to cities, but the real prize for phone companies is the vast rural market where nearly 70 percent of the population lives, analysts say.

India has 157 million cellular subscribers, according to a survey released this month.

Telephone penetration is around 25 per 100 people in urban areas, and as low as 1.6 per 100 in rural areas.

Analysts say India is just at the beginning of a telephone boom.

Home to more than a billion people, the country is the world's fastest growing telecoms market with just 15 percent of its population owning mobile phones compared to 36 percent in China, another major emerging market.

Bharti Airtel, part of Bharti Enterprises and India's most valuable telecom company with market capitalisation of more than US$40 billion, aims to boost coverage to 70 percent of the population in the coming year to March 2008.

The order announced on Wednesday was Ericsson's second major contract signed in as many months.

In June, the company won a one-billion-dollar deal with China Mobile to supply equipment to expand the Asian company's GSM coverage in 19 regions of China.

But according to recent media reports, another major deal Ericsson had hoped to sign in India appears to be shrinking.

In April, Ericsson and its Finnish rival Nokia were selected as suppliers of second and third-generation telephony equipment for India's state-owned telecoms company Bharat Sanchar Nigam Limited (BSNL).

The order was reported to be worth more than 30 billion kronor (US$4.5 billion, 3.3 billion euros), of which Ericsson was to be awarded two-thirds.

But the order is now expected to be scaled down drastically following the Indian telecoms ministry's displeasure over the price, Indian daily Business Standard reported in its online edition.

Ericsson has refused to comment on the BSNL order. - AFP/de