Nokia has won a contract to supply a new optical metro network to Telefónica Spain.

The deal is part of the operator’s three-year Fusión Red project to upgrade its network to IP.

Nokia’s kit consists of metro access, aggregation and core mesh connectivity to boost the ability of Telefónica’s network to cope with increased traffic.

The new network will be deployed in areas of high population density including Barcelona and Catalonia, Nokia said, and will ultimately cover half of Spain.

Financial details of the deal were not disclosed.

Telefónica’s Fusión quad-play offer has led to “explosive growth” in video traffic, according to a statement.

The operator said video accounted for two-thirds of the €1 billion digital services revenues it recorded in the first three months of the year.

Javier Gutierrez, Director of Network Strategy and Development, Telefonica Spain, said: "The demand for video as part of our Fusión service has moved our data traffic to levels never before seen.

“We have, however, anticipated this growth and are evolving our network through our Fusión Red project - first for IP, and now at the transport layer.”

[Read more: Telcos are not going to be digitally native consumer businesses, says Telefónica CIO]

Last summer, Telefónica selected Alcatel-Lucent and Juniper Network IP routing technology as part of Fusión Red.

Nokia saw revenues fall nine percent year-on-year in the first quarter as the vendor presented its first combined results since its takeover of Alcatel-Lucent.

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