Novatel ( NVTL) surged 7% Tuesday after the company said AT&T Wireless ( AWE) would use its modems to support the launch of a high-speed wireless network.

San Diego-based Novatel said it and Lucent ( LU) will supply AT&T Wireless with Merlin U520 third-generation universal mobile telecommunications system, or UMTS, wireless PC card modems. The move comes as AT&T Wireless prepares to roll out a network with greater multimedia capability.

AT&T Wireless, the No. 3 U.S. cell-phone service provider, has been hit hard over the last year by service shortfalls and customer defections. The company is expected to be acquired around year-end by its rival Cingular, the BellSouth ( BLS)- SBC ( SBC) venture that is currently the No. 2 wireless company.

On Tuesday, Novatel rose $1.31 to $22.18.