Vodafone says it will be able to offer more 3G phones

The world's biggest mobile phone operator by revenue said it expected to supply the new 3G handsets in 21 countries by September this year.

Neither side gave any further details about the size or cost of the order.

It marks Huawei's its first significant move into the European market. Last year, it had considered making a �600m bid for telecom equipment firm Marconi.

However, Huawei ditched the plans when Swedish firm Ericsson acquired most of the UK company's assets.

Greater reach

"This agreement offers us a great opportunity to expand into new regions alongside the world's leading mobile community," said Ping Guo, senior vice president at Huawei.

Vodafone's chief marketing officer Peter Bamford said the agreement would allow it to offer more 3G phones at more competitive prices.

"This agreement with Huawei shows the cost benefits Vodafone's size and global reach can bring to our customers," he added.

UK-based Vodafone also revealed on Wednesday that it now holds a 96.8% share of South African investment firm VenFin and holds an effective voting interest of 98.1%.

Vodafone is paying about $2.4bn for the deal which give the group access to VenFin's 15% stake in South African mobile phone operator Vodacom - taking Vodafone's share in the mobile firm to 50%.