Nortel inked a $150 million multi-year extension to its GSM supply contract with T-Mobile USA as the carrier marches forward with plans to upgrade its network with 3G technology.

The agreement calls for Nortel to provide GSM infrastructure equipment and services across T-Mobile's nationwide network to support the voice and data demands of the carrier's 26 million subscribers.

Danny Locklear, director of marketing at Nortel’s Wireless division, said the contract with T-Mobile involves core network technology as well as access equipment and will help the carrier stay on pace with capacity demands as it expands its networks. Locklear also noted that Nortel has been supplying T-Mobile USA with network planning and deployment since the carrier’s inception as VoiceStream Wireless in 1995.

"We see this (contract) as a big deal for us because it shows that our operators show confidence in us, that we can help them be successful in their business models by helping them drive their cost of ownership down and add subscribers to their network," Locklear said.

In North America, Nortel is known mostly for its CDMA business and its efforts to develop and market its WiMAX portfolio. However, Mysore Prakash, Nortel's GSM product marketing specialist, points out that internationally, Nortel has won several GSM contracts, including Orange in  France, BSNL in India and China Mobile in China.

Last week, Nortel announced a $135 million GSM supply contract with Cricket Communications.

"Between this contract announcement and the deal with Cricket, we feel that our GSM portfolio is gaining significant momentum," said Prakash.

Nevertheless, news of the contract did little to boost Nortel's stock price on the New York Stock Exchange, as the company's stock traded down 21 cents at $23.46 per share during midday trading.