The deal is a landmark for Huawei, which is seeking to expand in Europe, one of the most competitive mobile markets in the world.

Huawei beat Ericsson, the world's top telecom equipment maker, to win the deal, which will see it deliver and install the radio access part of Vodafone's 3G networks in "certain key cities in Spain," the firm said in a statement.

Company spokesman Fu Jun said that the deal represents "a major breakthrough" for Huawei.

The firm, a latecomer to the global telecom market, originally focused on developing countries.

But the Shenzhen-based firm has shifted its attention to Europe in recent years, a market dominated by established telecom equipment makers such as Alcatel, Ericsson, Nokia and Siemens.

The deal with Vodafone, the world's largest mobile operator by revenue, underlines the increasing recognition Huawei is winning from major global operators.

In December 2004, Huawei won a contract from Dutch operator Telfort to build a 3G network in the Netherlands.

Vodafone chose Huawei as one of its five preferred suppliers last year, and awarded the Chinese firm a 3G network equipment supply contract in the Czech Republic.

Vodafone Spain has more than 1.2 million 3G subscribers and is one of the most important and strongest performing operating companies in the Vodafone Group, according to Huawei.

Spain has one of the fastest growing 3G subscriber rates and highest average revenue per user (ARPU) rates for operators a major benchmark in the telecom market.

"Huawei's innovative solution within the radio access network, fully addresses our requirements for deploying a world-class 3G broadband network," said Helmut Hoffmann, Vodafone Group's director of Global Networks.

"The solution enables us to significantly reduce our operating costs, maximize the benefits offered to customers and improve our competitive position in the marketplace."

So far, Huawei has secured 30 commercial contracts based on the WCDMA (wideband code division multiple access and HSDPA (high-speed downlink packet access) 3G technologies.

In February, Vodafone signed a five-year global supply deal with Huawei for exclusive Vodafone-branded 3G handsets, which will be sold by Vodafone in 21 countries.

"As a strategic partner of Vodafone, Huawei will combine its technological know-how and leading solutions with its customer-driven service capability to strengthen Vodafone's leading market position," said Huawei Europe President William Xu.

Company spokesman Fu Jun said Huawei is currently discussing network equipment supply contracts with a host of European operators.

"The proven track record with the world's top-tier operators will also give a boost to Huawei's competitiveness in China's future 3G market," Fu said.

Huawei recorded annual sales of 45.3 billion yuan (US$5.6 billion) last year, while its contract sales hit US$8.2 billion.

Fu said Huawei expected its contract sales to reach US$10 billion this year.

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