Ericsson CEO Targets Growth In India And China
LONDON -(Dow Jones)- Swedish telecommunications equipment maker, Ericsson is targeting India and China as a focus for further growth going forward, Chief Executive Carl-Henric Svanberg said Thursday.
Svanberg said that recent acquisitions mean Ericsson is also now well positioned to grow in North America, despite a poor quarterly performance in a market where it has struggled. He added that he expects the company to continue to benefit from strong growth in the use of mobile data and multimedia applications.
The head of the world's largest wireless equipment maker said he believes that market conditions in the telecommunications market overall look good, despite the woes of rivals such as Alcatel-Lucent, which earlier this week warned on profits.
"It's a growing market and we are taking share," said Svanberg in an interview with Dow Jones Newswires.
Svanberg said the company is gaining share in most markets, but is in particular targeting India and China as two strong growth areas.
"India has taken the lead in the world in terms of adding the most (mobile phone) subscribers a month, just slightly above China," he said.
Svanberg, 55 years old, is hopeful of further growth in India following a recent court settlement between Indian telecommunications company BSNL and rival equipment maker Motorola.
In November an Indian court stopped BSNL from awarding an estimated $5 billion network equipment contract, after Motorola said it had been unfairly disqualified from the bid process. Ericsson and rival Nokia were at the time tipped as favorites for the contract, according to reports.
Svanberg said it has been well documented that Ericsson is favorite to win the contract, but added he will wait until the ink is dry until he celebrates.
"But in India there's more than just BSNL - there's five other operators and there's big deals out there," he said.
China also provides a potentially lucrative market for Ericsson, which already has 35% market share in the country, said Svanberg.
Earlier this month Ericsson said it was the only non-Chinese vendor to take part in China Mobile's trial of high-speed TD-S CDMA, a domestically developed third-generation, or 3G, mobile phone technology. Although Ericsson only won 1.4% of the total contract, reportedly worth around CNY26.7 billion (US$3.46 billion), Svanberg believes the company can gain a greater slice of future 3G mobile phone infrastructure projects.
"TD-S CDMA is a home standard, which doesn't have much of a market, because there isn't the spectrum outside of China. We expect it to get some share of the market [in China] as it's the Chinese government pushing it's own standard, but there's problems in terms of economies of scale," said Svanberg.
"We still expect wideband (CDMA) to be the prevailing standard and have no reason to see anything different," he said. WCDMA is a third-generation mobile phone technology now being introduced into many of the world's developed markets.
Svanberg said that despite a quarterly year-on-year drop in sales in North America, due to a massive rollout with AT&T's wireless operator Cingular in 2006 skewing results, Ericsson is still well-positioned to grow in the region.
In the last year Ericsson has built on its GBP1.2 billion acquisition of Marconi with a $2.1 billion purchase of Redback Networks Inc and then Entrisphere, a U.S. firm that makes fiber-access technology needed for high-definition internet TV, for an undisclosed fee.
With the company about to close on its EUR1.22 billion offer for Tandberg Television, Svanberg believes that Ericsson can appeal to North American operators introducing new broadband Internet services.
"If you look at the market, then there's a lot of activity among U.S. carriers with fiber-to-the-home and internet television services. We've positioned ourselves very closely to this trend through our acquisitions," he says.
Although this quarters results look "odd" in North America, the next two to three years will be "very exciting" for the company, he said.
However, Svanberg added that Ericsson is likely to focus on smaller acquisitions in the coming year, possibly for its multimedia unit where grew revenues 19% this quarter.
Svanberg points to the growth in mobile data usage, saying traffic has doubled in the last six months, showing a growth in music downloads to cellphones and use of wireless laptops.
"Of all the world's music distribution, including records, 6% is done over digital networks and that's expected to grow to 30% in coming years. Half of that digital music is done over mobile phones," he said.
Company Web site: http://www.ericsson.com
-By Daniel Thomas, Dow Jones Newswires; 44-20-7842-9264; dan.thomas@dowjones.com
(END) Dow Jones Newswires"
Posted to the site on 26th April 2007
