Sunday Communications, Hong Kong's smallest mobile carrier, has chosen China's Huawei Technologies to build its 3G network for up to HK$900 million ($115 million), bypassing better-known global equipment makers.

The sale, announced Thursday, is the first major 3G deal for Huawei, China's biggest telecoms equipment maker.

The company is using low prices to help fulfil its global aspirations.

The selection of Huawei over big players such as Motorola, Ericsson and Nortel Networks, which have endured several lean years, was based in part on improving ties with China, Sunday Managing Director Bruce Hicks said.

"We very much believe that the future of the telecommunications industry in Hong Kong will be closely linked to China," Hicks told reporters at an event to announce the deal.

"That is the world's largest mobile telecoms market."

Hicks said Sunday plans to launch a multimedia-enabled third-generation (3G) service in Hong Kong late in the third quarter of 2004 or early in the fourth quarter.

Its network will be based on the European-developed WCDMA standard, with a price tag of HK$850 million to HK$900 million.

In keeping with its China focus, the system could also be expanded to adopt the TD-SCDMA technology that China is developing, which could a give a boost to the fledgling standard.

"It's clear that China is supporting TD-SCDMA," Hicks said. "To be working with a vendor that is involved in the development of that gives me a lot of comfort."

Sunday is the smallest of Hong Kong's six mobile carriers, with about 600,000 subscribers in one of the world's most competitive markets.

Earlier this week, rival Hutchison Whampoa, the most aggressive investor in European 3G, said it would begin the commercial rollout of 3G mobile services in Hong Kong in early January.

Hong Kong-based Hutchison's delayed 3G launches in the UK and Italy earlier this year were beset by technology glitches, and more recently by a shortage of available handsets. Its commitment to the commercially unproven technology has weighed on its share price.

Huawei's offer to Sunday was sweetened with HK$500 million in financing for the carrier, which will use the money to repay other loans.

"Huawei is trying to increase its impression worldwide," said Xu Zhijun, Huawei executive vice president of wireless products.

Huawei, which has said it wants to eventually go public, said last month it expects sales to grow 43 percent next year to about $5 billion, fuelled by exports expected to as much as double to $2 billion.

Most of its exports to date have been to less developed countries such as Russia and Egypt, but more recently it has also made sales to more advanced markets including the UK, Germany and France.

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