Huawei of China yesterday highlighted its growing power in the telecoms equipment market when it won a large contract from a traditional customer of European rivals Ericsson and Nokia Siemens Networks.

Telenor, the Norwegian mobile phone operator, said it had picked the Chinese company and a US partner to replace its entire wireless infrastructure in Norway and upgrade the network for fourth-generation services.

The loss of a big contract in their Nordic stronghold underscores the challenge facing Ericsson and NSN as competition from China increases and capital expenditure by mobile operators remains weak.

NSN, a joint venture between Nokia of Finland and Siemens of Germany, said this week it planned to lay off up to 5,800 people as part of a €500m ($743m) cost-cutting drive.

Huawei has already overtaken Alcatel-Lucent, the Franco-American company, to become number three in the equipment market after Ericsson and NSN. It doubled its share to 17 per cent over the past year, according to industry estimates.

Much of the gains have come in China and other emerging markets but the contract to build a 4G network in Norway shows that Huawei is becoming a force in even the most advanced markets.

“This is the biggest upgrade of the mobile network in Norway we have ever carried out,” said Ragnar Kaarhus, head of Telenor Norway, attributing its choice of Huawei to “a combination of technical quality, reliability . . . and commercial terms”.

Telenor's existing infrastructure was built by Ericsson and NSN. Analysts said a 3 per cent fall in Ericsson's share price yesterday was in part attributable to the contract loss, although the significance was more symbolic than material for the Swedish company.