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* Gartner sees 6 pct sales growth after 3 pct last year
* China's 4G push to boost sales, but drag on margins
* European investment driven by Vodafone's Project Spring
* Alcatel's margins seen at risk, Ericsson well positioned
* Resurgent Nokia hungry for more sales of network gear
By Sven Nordenstam and Leila Abboud
STOCKHOLM/PARIS, Jan 20 (Reuters) - Telecoms networkoperators are expected to spend more on equipment for the secondstraight year in 2014, with China and Europe bringing a freshspurt of growth as service providers need to build out highspeed 4G mobile broadband networks.
Market research group Gartner sees global sales of networkequipment to carriers rising 6 percent to $85.4 billion thisyear, up from 3 percent last year. Asia, excluding Japan, shouldgrow 7 percent, and Europe and North America 6 percent.
Specialist telecoms forecaster Dell'Oro is less bullish butstill expects 3 percent growth, compared with 2 percent in 2013.
The predictions are good news for Europe's network equipmentmakers - Sweden's Ericsson, Finland's Nokia and Franco-American group Alcatel-Lucent -but analysts do not expect a softening of brutal pricecompetition with low-cost Chinese rivals.
Nor will all the vendors fare the same. China Mobile's huge roll-out of 4G will be more of a boon fordomestic firms Huawei and ZTE that won twothirds of the work. But China is a mixed bag for Ericsson,Alcatel and Nokia, boosting sales but dragging on margins sincesales there commanded lower prices.
In Europe, Ericsson and Huawei are best positioned tobenefit from growth because they are major suppliers to Vodafone, which is due to spend 7 billion pounds underits 'Project Spring' programme by March 2016 to increase thespeed and coverage of its networks.
"Ericsson has higher exposure to Europe, so that willlargely offset the weight from China contracts and protect themargins, while Alcatel-Lucent is more at risk because of itssmaller scale in Europe," said Bernstein analyst Pierre Ferragu.
U.S. SLOWDOWN
Analysts are less certain how much United States operatorswill spend this year as market leaders Verizon and AT&T have largely finished building their 4G networks, leavingthem to add further capacity when customer demand requires it.
However, others want to catch up on 4G to compete.Third-largest operator Sprint plans to spend $8 billionthis year and next on a major network upgrade. Backed by Japan'sSoftbank, Sprint chose Alcatel, Nokia and Samsung as suppliers, dropping long-time vendor Ericsson.
T-Mobile US, which is owned by Deutsche Telekom,also spent $3.3 billion in January to buy mobile spectrum fromVerizon to beef up its coverage. ID:nL3N0KG2YD]
Gartner predicts North American operators will spend 9percent more on mobile gear this year, from 6 percent last year.But investment bank UBS expects capital expenditures on mobilenetworks to rise only 1 percent and Bernstein sees it as flat.
Gartner analyst Akshay Sharma said Sprint's plan showed thatupside surprise was possible. "That could be a game changer, ifyou are all of a sudden spending billions on network roll-outs,"he said.
However, if Sprint and T-Mobile merge, as sources have saidSoftbank is currently working on, it could throw operators'network investment plans into question.
Europe could also grow faster than expected if Telefonica, Telecom Italia and Deutsche Telekom react to Vodafone splashing out on its networks.
"Vodafone is putting pressure on everyone. We could end upwith a pretty good year in Europe in mobile equipment," saidExane BNP Paribas analyst Alexandre Peterc.
PRICES FALL
Despite a positive outlook for growth, few executives orinvestors expect an end to a decade-long price war launched bythe Chinese vendors when they were trying to conquer foreignmarkets. Industry leader Ericsson's margins have dropped below10 percent from more than 20 percent in 2005, whileAlcatel-Lucent has posted an annual profit only once - in 2011 -since it was formed in a transatlantic merger in 2006.
Although some price pressure has faded as Huawei has stoppedfighting for market share to focus on margins, equipment priceslook set to keep falling, according to a UBS survey ofpurchasing managers.
Some 42 percent of respondents expect telecom equipmentprices to drop even more than usual over the next year, whereas30 percent expected a "typical" decline of 10 to 15 percent.This was a shift from the last survey when 80 percent expectedprices to fall at their normal rate or less.
Nokia's network equipment business NSN could sacrificemargins to win contracts this year because it needs to boostrevenues, which analysts say fell by around 17 percent lastyear.
"They will be aggressive, but I don't think it will totallykill pricing in the sector, because there simply aren't enoughnew contracts up for bid this year," said Exane's Peterc.
Nokia is first to report earnings for the fourth quarter andfull year, on Jan. 23, with Ericsson following a week later andAlcatel-Lucent two weeks later, on Feb. 6.
