Ericsson pushes eastwards to capitalize on hunger for advanced networks

The world number one mobile network equipment maker is seeing marked growth in the Middle East, China, India and Russia

Saffiya Ansari
Saffiya Ansari - Al Arabiya News, Stockholm
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Founded in 1876, Sweden’s Ericsson has seen it all. The telecom company has in recent years seen a push eastwards, the significance of which was highlighted with North American operators cutting investment in high-speed networks.

The world number one mobile network equipment maker, ahead of China’s Huawei and Finland's Nokia, is seeing marked growth in the Middle East, China, India and Russia which offsets the North American sales drop, however.

A build-out of the newest 4G/LTE networks by operators in North America, where Ericsson makes about a quarter of its sales, has supported the Swedish firm at a time of stagnation in much of Europe. However, the period of intense investment to equip networks to deal with huge traffic increases from on-demand video and mobile internet use may be drawing to a close. The two biggest U.S. operators, Verizon and AT&T, have both said recently that they are slowing the pace of capital spending, Reuters reported.

The company's nine per cent on-year sales growth at SEK 57.6 billion ($7.78 billion) in the third quarter to September, 2014 was “mainly driven by Middle East, China, India and Russia and partly offset by lower sales in North America,” Hans Vestberg, president & CEO of Ericsson, said in a statement in October.

Also in October, the telecom gear maker announced the formation of a separate business unit to cater to rising demand from India and in the same month, Algeria Telecom chose Ericsson for the transformation of their broadband aggregation network highlighting the telecom giant’s push eastwards.

At an Ericsson business innovation conference this week, the company announced its latest Middle East offering – a partnership with Zain Bahrain to offer high-quality voice services which allows users to make clear calls in noisy environments and allows for more effective conference calls and better speech-to-text applications.

The Middle Eat North Africa region is in the top three in terms of performance of Ericsson’s ten regions, Rafiah Ibrahim, Ericsson’s head of Region Middle East, told Al Arabiya News.

“The Middle East is in growth… Our customers - the enterprises and the providers - are all looking for the prototypes and services Ericsson is offering.”

Ibrahim contended that the drop in the North American market did not affect her targets for the MENA region.

“Whether or not we are progress in the Middle East has got nothing to do with North America. My focus, my targets and my scope is to grow the region. The Middle East is in a very good stage of growth right now so we need to capitalize on that.”

But what is fueling the Middle East’s hunger for Ericsson’s products and services?

“It is a very big region and the coverage is still not at the level that it is in Europe, for example, where it is very developed. So, we are looking at the core business of Ericsson which is network coverage, which is still required,” she said.

“At the same time, the modernization of current networks is also going on as in some of the region’s countries there are very old networks,” she noted, adding that service providers in those countries are seeking to modernize to a point where they can adapt to and be able to offer the latest software releases on their network.

Lastly, Ibrahim noted that “the government is in such a stage that they believe that the modernization of the government is required to reach out to all citizens and how can they do it if not for e-education or mobile health and e-commerce.

“Dubai is going for smart city, Qatar and Riyadh too. So, our region is prosperous with opportunities.”

Ericsson is also keeping a close eye on India's mounting appetite for data and is looking heavily to its youth population to fuel the demand. India region head Chris Houghton recently said that "India, with its very young population, is at the heart of the transformation that Ericsson plans to ring in through mobility".

On Nov. 5, Ericsson announced the provision of 30,000 WiFi access points to India’s Ozone, a WiFi provider in the country with its CEO Sanjeev Sarin saying in a released statement: The “offering will enable us to better manage consumer expectations in ultra-dense environments…In today’s world, consumers like to be connected at all times which means network capacity becomes an extremely important factor.”

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