Updated from 10:48 a.m. EDT

Verizon Wireless is strengthening its relationship with Cisco ( CSCO) as the telecom giant bulks up its mobile network capacity.

The deal, which will be announced at the CTIA conference Tuesday, aims to bolster the company's mobile internet networks and up the ante in its battle with rivals AT&T ( T) and Sprint ( S).

Verizon Wireless, which is a joint venture between Verizon ( VZ) and Vodafone ( VOD), will now deploy a slew of Cisco technologies to expand capacity and backhaul capabilities for its 3G and 4G mobile Internet services.

These include Cisco's ASR 9000, ASR 1000, and CRS-1 routers, making Verizon Wireless the world's largest user of the CRS-1 technology.

The telecom firm, which also works closely with troubled equipment provider Nortel Networks ( NT) to deliver broadband services, has a long-standing relationship with Cisco, although the value of the latest deal has not yet been revealed.

The networking specialist helps deliver managed services to Verizon Wireless customers, and the two firms began working on 3G networks in 2007. Verizon's business division is also a major user of the networking giant's Integrated Service Router (ISR).

The latest deal spells good news for Cisco, which is wrestling with a tough spending climate and recently slashed its third-quarter sales forecast. The San Jose, Calif.-based firm has even entered the server market in an attempt to open up new revenue streams.

Verizon Wireless, which is rumored to be a planning 3G netbook, has challenges of its own. The company is facing increased competition from rival AT&T, which plans to invest between $17 billion and $18 billion to enhance wireless and broadband networks.

Verizon shares were recently up 3.2% to $31.16, and Cisco shares were up 3.6% to $17.38.

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