CEO sees markets beyond traditional telecom

Press release
May 05, 2010 10:05 (GMT +00:00)
  • Determined to grow faster than market in traditional segments
  • Addressable market valued at USD 350 billion
  • New customer segments to address
Today at Ericsson's (NASDAQ:ERIC) Capital Markets Day in Stockholm, President and CEO Hans Vestberg made remarks on the telecom industry and Ericsson's position.

"We have just seen the beginning of the massive data growth, driven by smartphones and other mobile devices. These new devices provide operators with new charging capabilities. As a consequence, we are beginning to see signs of changed operator tariffs and pricing models aligned to consumer needs, especially for mobile broadband services and data usage. It's important for us to follow this development," Vestberg said.

Ericsson estimates show that the number of mobile broadband users will increase from today's 400 million to 3.5 billion in 2015.

"These fundamental industry drivers require operators' to focus on network quality and efficiency. In addition, in the developed world, where the networks have been up and running for quite a long period, we will see operators modernize their infrastructure not only to meet increased data usage, but also to reduce power consumption and use frequencies better. These are challenging operations, requiring deep technology understanding and services capabilities as well as insights on advanced business support systems and understanding of consumer needs in order be successfully performed."

Vestberg continued by stating that the operator environment is becoming more complex in competition for consumers who are becoming increasingly advanced and demanding.

"We will see new business models emerging and so called coopetition among operators, where they will share platforms and build scale together around applications."

Vestberg, who took on the position as President and CEO as of January 1, 2010, continued by elaborating on Ericsson's industry leading position in mobile networks, services and multimedia as well as platforms and handsets via the joint ventures ST-Ericsson and Sony Ericsson. Vestberg said that converged networks is an area where the company intends to continue investing.

"We see good long-term growth opportunities in our traditional segments and we are determined to further strengthen our position and continue to grow faster than the market. Less than 5% of the world's population has access to 21 Mbit/s or more in the air, at least 1.5 million installed GSM radio base stations must be replaced and in addition we see continued need for services in fields such as consulting, system integration and managed services. We estimate that our addressable market, including joint ventures, is worth USD 350 billion."

"However, we are not satisfied with our position today and we see new markets to address. The capabilities we have in place today enable us to address customers also beyond traditional telecom operators such as cable and TV-companies, governments, healthcare, transport and utilities. These are industries where there is a huge need for telecommunication services," Vestberg stated.

Vestberg was also joined by Mr. Manoj Kohli, CEO of Bharti Airtel. Mr Kohli attended via a video link from India and elaborated on the challenges Bharti meets in India where the number of mobile subscriptions grow by 20 million only in March, making India the fastest growing market in the world.

Mats H Olsson, head of Ericsson in China and North East Asia as well as Angel Ruiz, head of Ericsson North America, also joined via video link.

"Mainland China added more than 100 million subscriptions last year and we expect similar numbers in 2010", said Mats H Olsson. "Non-voice revenues now make up 30% of Chinese operators' total revenues and one of our focus areas for this year is deployment of TD-LTE in China and LTE in Japan and Korea.  We also see further opportunities to increase our GSM footprint in mainland China".

 "We have taken every LTE-contract announced in North America and with the acquisition of Nortel we now have access to 50% of the market we couldn't approach previously. We take nothing for granted, but we are ready to move to the next level and achieve even greater market leadership", said Angel Ruiz,

Other Ericsson executives on stage were: Executive Vice President and CFO Jan Frykhammar, Chief Strategist Douglas L Gilstrap, Chief Technology Officer Håkan Eriksson, Executive Vice President and head of business unit Networks Johan Wibergh, head of business unit CDMA Mobile Systems Rima Qureshi, head of business unit Global Services Magnus Mandersson and head of business unit Multimedia Jan Wäreby.

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Ericsson is the world's leading provider of technology and services to telecom operators. Ericsson is the leader in 2G, 3G and 4G mobile technologies, and provides support for networks with over 2 billion subscribers and has the leading position in managed services. The company's portfolio comprises mobile and fixed network infrastructure, telecom services, software, broadband and multimedia solutions for operators, enterprises and the media industry. The Sony Ericsson and ST-Ericsson joint ventures provide consumers with feature-rich personal mobile devices. 

Ericsson is advancing its vision of being the "prime driver in an all-communicating world" through innovation, technology, and sustainable business solutions. Working in 175 countries, more than 80,000 employees generated revenue of SEK 206.5 billion (USD 27.1 billion) in 2009. Founded in 1876 with the headquarters in Stockholm, Sweden, Ericsson is listed on OMX NASDAQ, Stockholm and NASDAQ New York.


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