GTP-U is used for carrying user data within the UMTS core network or LTE Core Network and between the radio access network and the core network. The user data transported can be packets in any of IPv4, IPv6, or PPP formats.
GTP-U in LTE
GTP-U in UMTS
(GTP-U is used for IuPS and Gn Interfaces)
How GTP-U Encapsulation Works
Lets take a example and see what happens when IP packet generated by UE reaches to eNodeB and is then forwarded to SGW.
Consider any application on UE creates an IP/TCP packet. This packet consist of actual data by application, TCP or UDP header and then IP field information which has source address of UE and destination address of application server (e.g. Facebook)
When the eNodeB receives this packet over air interface, it will put the IP packet inside GTP header which has information related to tunnel IDs. Then further, it is encapsulated inside UDP and IP header and forwarded as ethernet frame towards SGW. Here the IP header contains eNodeB IP as a source address and SGW IP as a destination address