The LTE deployment will cover Maharashtra, Madhya Pradesh, the North-East and Himachal Pradesh, which serve over 40 million subscribers.
The agreement also includes transformation of Idea Cellular's existing mobile radio access and core network infrastructure across nine circles for 2G and five circles for 3G.
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The company, however, did not disclose the financial details.
"The contract covers equipment, software and a range of professional services, including project management, systems integration and supervisory managed services for 4G/LTE across select circles for two years," Ericsson said in a statement.
Idea, the country's third-largest mobile operator, has launched 4G LTE services in eight telecom circles - Andhra Pradesh and Telangana, Tamil Nadu, Karnataka, Kerala, MP and Chhattisgarh, Punjab, Haryana and Odisha, and is looking to expand to 750 towns across 10 circles by June 2016.
"We are committed to offering our customers the best possible mobile experience. Transforming our 2G and 3G network will enable us to offer optimised mobile data and better smartphone performance while our LTE deployment will take the customer experience on Idea Cellular's network to the next level," Idea Cellular CEO Himanshu Kapania said.
Ericsson is present in all high-traffic LTE markets, including the US, Japan and South Korea, and is ranked first for handling global LTE traffic - 40 per cent of the world's mobile traffic is carried over Ericsson network.
"The latest Ericsson Mobility Report shows that India added more mobile subscriptions than any other region in the third quarter of 2015. These subscribers are increasingly demanding better network quality and superior services," Ericsson India Head Paolo Colella said.