Mobile phone maker Nokia has announced a $150m deal for telecoms hardware with a subsidiary of the world's largest mobile phone operator, China Mobile. 

Under the deal with Henan Mobile Communications Corporation (Henan MCC), Nokia will supply back-end telecoms equipment to expand the regional operator's GSM and GPRS networks in central China.

The network expansion is aimed at improving coverage for customers throughout China's centrally-located Henan province, particularly outside urban areas, according to Nokia. The new equipment will go into service within two months.

"Mobile communications continues its fast growth in the Henan province, where Henan MCC has 17 million mobile subscribers," said Huang Shu, Henan MCC's deputy general manager.

"With this expansion, we can continue to offer high-quality mobile services and strengthen our position in the Henan market."

The deal is the latest in a relationship stretching back more than 10 years. Prior to this sale, Henan MCC's last major equipment purchase, for $170m worth of Nokia's GSM, GPRS and WCDMA network equipment, was announced in February and was scheduled for completion by the beginning of June.

Henan MCC's parent, China Mobile, is the world's largest mobile phone service company measured by number of users, with more than 220 million subscribers.

It controls approximately half of China's market. Henan MCC serves Henan province, which has a population in excess of 100 million.

Less than two months ago, Nokia signed an equipment sales contract with China Mobile's main competitor, China Unicom, which is the country's second largest mobile operator. 

"We are extremely delighted with our progress in the GSM business and our deepening cooperation with mobile operators in China," said Nokia China vice president Yuan Wei at the time of the signing.

"The mobile market and the number of subscribers in China are growing quickly and steadily."

Demand for new phones for first time users is still strong in China. According to forecasts published earlier this year by Pyramid Research, China's mobile market will expand by more than 50 per cent to reach some 740 million subscribers by 2010.