The French company Alcatel-Lucent (Euronext Paris and NYSE: ALU) has closed a deal with the Spanish group Telefónica to provide femtocells throughout Europe and South America. The financial terms of the deal were not disclosed.

The announcement was made on the same day that the company revealed that it was turning away from a contract with India’s BSNL. As RCR Wireless posted yesterday, Alcatel-Lucent’s shares (ALU) soared when the firm said it was opting out of a $1 billion contract order because it did not want to try to match ZTE’s bid for the telecom operator’s business. ZTE reportedly bid $842.06 million for BSNL’s entire contract, which is valued at $1 billion-$1.2 billion, according to BSNL.

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As part of the Telefónica deal, Alcatel-Lucent is providing 3G femtocells, which according to the vendor, are “plug-and-play units no larger than a typical Wi-Fi router and can easily be installed by the user.” The goal is to extend the operator’s network into residential or commercial buildings, increasing both voice quality and mobile broadband service capacity, such as the ability to watch live streaming, high definition sports coverage.

In a statement, Ian Miller, Telefónica’s radio access network director, noted the carrier is also looking to meet the demand caused by upcoming major sporting events including the London 2012 Olympics and 2014 FIFA World Cup being held in Brazil.