Nortel Networks' shares were surging roughly 7 percent on rumors the company has sealed a supply deal with Orange SA.

Orange reportedly has awarded a supply contract to Nortel to help build part of its 3G network, according to circulating media reports. The companies did not return calls for comment before deadline.

Orange originally chose Nokia, Ericsson and Alcatel as equipment vendors in October 2000. In a RBC Capital Markets research comment, the analysts speculate that Nortel may be displacing Nokia. Other reports indicate that Nokia is still involved with Orange, as is Alcatel, according to a Reuters report. A Nokia spokesperson was unavailable for comment.

Nortel and Orange have an existing relationship with Nortel supplying GSM radio equipment, optical metro and long-haul DWDM gear and GSM/GPRS equipment.

Nortel isn't commenting on the possible deal. Instead, the company is focusing on a deal with China Unicom to deploy CDMA2000 1X networks based on Nortel's solutions in four leading markets in China.

The deal, valued at $139 million, is phase 3 of a three-part China Unicom expansion plan. Nortel supplied infrastructure for phase 1 and 2. Once complete, China Unicom will offer enhanced CDMA2000 1X network capacity for nearly 6 million subscribers.

The China Unicom announcement is just one of many infrastructure deals Nortel has unveiled recently. As of Aug. 31, the company has installed more than 35,000 3G-ready base stations for its more than 65 CDMA customers spanning 17 countries.