Vodafone has signed a five-year contract with China's communication equipment manufacturer Huawei and commissioned the latter to exclusively produce 3G mobile phones for Vodafone's European business.

This is the first big deal for Huawei in Europe.

The mobile phones will bear Vodafone's brand and be sold in 21 countries across the world. The first type of mobile phone will be delivered to Vodafone in September 2006.

Analysts quoted in local media believe the cooperation between the two will help present Vodafone's 3G mobile phone at a much lower price to consumers.

The parties have not disclosed further details of their cooperation or the expected price of the mobile phones.