Ericsson earmarks US$1b for China

PUBLISHED : Thursday, 08 September, 2005, 12:00am
UPDATED : Thursday, 08 September, 2005, 12:00am

Firm says mainland market for network equipment could outpace that of the US

Ericsson, the world's largest mobile network supplier, is doubling its investment in China to US$1 billion over the next five years, as it gears up for the roll-out of 3G services on the mainland.

Mats Olsson, the president of Ericsson Greater China, said yesterday he expected Beijing to issue 3G licences early next year and operators to start building their networks soon afterwards.

'When Chinese operators launch their 3G mobile services, the market size [for network equipment] could possibly overtake that of the US,' said Mr Olsson in an interview with the South China Morning Post yesterday.

In the first half of this year, the US led Ericsson's list of top 10 worldwide markets, contributing 13 per cent of its sales of 69.91 billion krona ($70.92 billion), followed by China, which accounted for 8 per cent.

Mr Olsson said Ericsson was now targeting a market share of 35 per cent of China's 3G equipment market based on WCDMA (wideband code division multiple access) technology, and he put the 3G market size at US$10 billion to US$12 billion over the next three years.

Ericsson chief executive Carl-Henric Svanberg conceded, however, that in the run-up to the launch of 3G services, mobile operators would slow capital expenditure and mainland sales revenues would thereby initially 'soften out, as everybody awaits the government's decision on 3G'.

But capital expenditure would return next year as the overhang from 3G licensing cleared up, he added. For the first half of this year, operators spent 12.2 per cent less on fixed telecommunications assets than a year ago, at 77.81 billion yuan, according to Ministry of Information Industry data.

Ericsson is the largest supplier to China Mobile's GSM and 2.5G, or GPRS (general packet radio service), networks. It also claims a 15 per cent share of supplies to the GSM network of No2 mobile operator, China Unicom.

While operators await 3G licensing, Mr Olsson said they were building up their training systems in preparation for the service.

Ericsson is one of the two equipment partners selected by China Telecom for trials on HSDPA (high speed downlink packet access). It was recently recognised by the ministry as an equipment vendor for TD-SCDMA, the country's home-grown 3G technology, qualifying it for bidding for a TD-SCDMA network contract.