Deregulation brought with it a tendency for manufacturers to begin to acquire operators. At Televerket in Sweden, this was, naturally enough, a sensitive issue. Bo Magnusson recounts: “It was a concept we always advised Ericsson against trying. It was an effective way of closing off many openings for the supply of equipment.”

However, that was exactly what Motorola did in Hong Kong, for instance, and it was noted at Ericsson that the competitor was also trying to move into other places as well. Johansson says: “At strategy meetings, we asked ourselves how we should act and concluded that we could get involved as operators to a limited extent, but not close to home.”

This question became a burning issue in the context of ERA’s successful push into the US in the mid-1980s. “We had a number of chances to set ourselves up as an operator. We were often offered warranties, for instance, in compensation for the delivery credits we made available – options that would have enabled us to buy into the operators. We could have taken on a 20–25 percent holding in Cantel on very good terms. But for policy reasons we did not get the green light from the group executive team,” says Johansson.

Buenos Aires was another test case. Ericsson had been functioning as an operator in Argentina for a long time. When licenses for mobile operations were initiated, Ericsson agreed with Bell South to submit a joint application.


Johansson recounts: “We had lobbied effectively and were sure that we would get a license. When we were going to draw up a letter of intent for the Bell Company, their response was negative, however, and we got no explanation until it became clear that they would be cooperating instead with Motorola. We suspected, rightly or wrongly, that American intelligence interests were behind this. Motorola had good contacts with the defense area, which it exploited.”

A new attempt was made when a third GSM license was on the cards in the UK. Johansson and his colleague Mats Ljunggren started negotiating with Hutchison and GTE. “We agreed on Ericsson taking a third of the partnership in the new operating company that was going to be set up, and left the meetings with a consortium agreement that was ten centimeters thick.”

The day after the application had been announced, Johansson was summoned to Svedberg who ordered its withdrawal. “The current head of British Telecom had rung Björn to tell him off and threatened to cancel all orders for AXE and other equipment if we started competing with them in mobile telephony,” Johansson says. 

The consortium found an English cable-TV company to act as the third partner. The operating company that was formed was called Orange, and has since been acquired by France Telecom.

Author: Svenolof Karlsson & Anders Lugn

© Telefonaktiebolaget LM Ericsson and Centre for Business History

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