Nortel sees equipment sales growth on data demand

The popularity of SMS, particularly in China, will lift wireless service providers

The wireless telecommunications equipment market will be stronger than forecast this year because of surging demand for data, a trend that is likely to accelerate as mobile-phone users begin paying for a host of new services, according to Nortel Networks.

Nortel president and chief executive Frank Dunn said most industry executives had factored in a 10 per cent decline in wireless revenue for this year, a number that now looks pessimistic.

'There's a stronger data services market. We thought there would be a 10 per cent overall market decline in 2003 versus 2002. We're seeing some strength,' Mr Dunn said yesterday.

That would be welcome news to Nortel, North America's second-largest telecoms equipment company, and to a host of wireless service providers globally, including China Telecom and China Unicom.

Several Chinese Internet companies, including Sohu and Net-ease, have seen their share prices skyrocket on investor optimism that demand for short-messaging services (SMS) and other data services would continue to climb. Nortel sells its equipment in advance of delivery of telecoms services, is a harbinger of revenue trends and appears to be signalling that demand will continue.

Mr Dunn said analysts focused too much on SMS, while other services - some stemming from third-generation wideband networks - would fuel growth.