Shares of

Alcatel-Lucent

(ALU)

traded higher Tuesday after the company announced an agreement with

China Mobile

(CHL) - Get Report

to provide mobile communication equipment and services.

The $1 billion arrangement requires Alcatel to provide China Mobile with mobile core network gear, wireless network equipment, applications, transmission and IP routers and related services. Alcatel will also supply China Mobile with time division synchronous code division multiple access, or TD-SCDMA, equipment. The agreement was secured by Alcatel's flagship company in China, Alcatel Shanghai Bell.

"We are delighted to be selected to continue providing solutions and services to China Mobile," said Olivia Qiu, president of Alcatel Shanghai Bell. "The strategic frame agreement with China Mobile reinforces Alcatel-Lucent's position as a trusted partner, as China Mobile relies upon our network solutions and services to meet their growing demand for mobile and now fixed services and in advancing China's telecommunication industry."

The announcement comes less than a month after Chinese officials unveiled plans to merge six state-owned phone providers into three in a move designed to offer more competition for China Mobile, which has the largest subscriber count in the world with nearly 400 million.

Chinese wireless provider

China Unicom

(CHU) - Get Report

will acquire fixed-line services company

China Netcom

(CN) - Get Report

as part of the first step in the country's reshuffling of its telecom shops. China Unicom will also sell its code division multiple access, or CDMA, network to

China Telecom

(CHA) - Get Report

for $15.86 billion.

Once the restructuring is complete, three 3G spectrum licenses will be granted to the merged companies. China Telecom will use a CDMA network, while a merged China Unicom and China Netcom is expected to build out a 3G network based on wideband code division multiple access, or WCDMA, technology. China Mobile would be committed to operating its TD-SCDMA network.

Alcatel was lately up 30 cents, or 4.5%, to $7.03. The stock is still lower by 4% on the year. China Mobile, which has lost nearly 20% since the reshuffling in Chinese telecom names was proposed, was lately up nearly 1% to $69.42.

Among other networking equipment makers,

Nortel

( NT) rose 2.2%,

Ericsson

(ERIC) - Get Report

added 2.1%,

Cisco

(CSCO) - Get Report

was up 1% and

Juniper Networks

(JNPR) - Get Report

tacked on 0.1%. Meanwhile,

Qualcomm

(QCOM) - Get Report

was down 0.2%.