A Big Year

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It was a great year for Ericsson with the company growing by 59.9%, from Rs 5,004 crore in FY 2006-07 to Rs 8,000 crore in FY 2007-08. Of this Rs 150 crore came from voice solutions and Rs 75 crore from the broadband segment, with the remaining chunk coming from wireless.

The highlight of Ericsson's performance last year was its relationship with Bharti Airtel. According to V&D estimates, Bharti spent close to 70-73% of its investments in equipments on Ericsson. The two-year, $2 bn deal with Bharti Airtel was signed for network expansion. This is the company's largest deal till date.

Ericsson was selected by Idea Cellular as the sole supplier of its GSM network in Mumbai. The deal with Idea Cellular marks Ericsson's first network win in Mumbai and completes its footprint in India's 23 telecom circles. It also entered into a managed service partnership with Idea.

Last year the company signed a turnkey contract worth $1.3 bn to supply GSM and WCDMA/HSPA equipments and related telecom services to BSNL. Apart from other contracts including IN and VAS deals with Vodafone and a deal with Spice Telecom to provide push email and personal information management services via its hosted solution.

Ericsson 2

A decline in the CDMA segment has forced Ericsson to discontinue its CDMA wireless segment. The company is not taking any new order in this space. Ericsson plans to increase its base stations from 35,000 last year to around 45,000 this year.

Though very little of Ericsson's revenue has come from broadband, currently it is a focus area for the company. And the market opening up this year should bring an increase in revenue from this segment.

Among its prominent contracts this year is a three-year deal with Aircel for the delivery of its hosted consumer push email service.

Globally, Ericsson recorded a slower growth and posted an outlook for flattish mobile infrastructure market. The company experienced pressure on profit margins mainly because of weaker sales of mobile network upgrades and expansions, combined with high sales of new network build-outs.

The company is investing significantly in mobile broadband. Ericsson's Gramjyoti Rural Broadband Project is part of this endeavor.

India accounts for around 6% of the total sales for Ericsson and this is mainly because the proportion of new networks built in India is dramatically increasing. However, this along with a weaker dollar also puts pressure on the company's margins.

Ericsson's multimedia business is still in its initial stages and is likely to be given impetus by its acquisition of Tandberg Television. Tandberg Television was consolidated from May 2007.

We grew faster than the market

PRESIDENT, ERICSSON

Mats Granryd

Address: Ercisson Forum, DLF Cybercity,
Sector-25A, Gurgaon 122002, Haryana, India

Tel: +91-124-2560808 Fax: +91-124-2565454

Website: www.ericsson.com/in

Highlights

Bagged Rs 8,000 crore from Bharti, the largest deal ever for Ericsson
Selected by Idea as the sole supplier of its
GSM network in Mumbai
Won an order worth Rs 5,200 crore to supply GSM and WCDMA/HSPA equipment to BSNL
Bullish about 3G

What were the highlights of the last fiscal?
It has been a fantastic year for us and we grew faster than the market. One of the major reasons for this was our partnership with the right players. We continued with our relationship with Bharti and bagged a Rs 8,000 crore deal, which is the largest deal ever for us.

Last year also saw us winning a turnkey contract worth Rs 5,200 crore to supply GSM and WCDMA/HSPA equipments and related telecom services to BSNL. The company also got orders from BSNL, and IN and VAS deals from Vodafone. Ericsson was also selected by Spice Telecom to provide push email and personal information management services via its hosted solution. We also signed a deal with Idea Cellular as their sole supplier of its GSM network in Mumbai. We have also signed a three-year deal with Aircel for the delivery of its hosted consumer push email service.

This year we would be focusing on the broadband segment, as well as, work with Bhutan Telecom for its WCDMA/HSPA network.

In 2006-07, you started to develop bio-fuels as a source of power for wireless networks in rural India. How far have you developed in the plan?
Power is a scarce commodity. About 23 base stations in rural areas in the Latur district of western India are now being powered with biodiesel produced from waste cooking oil at a plant in Hyderabad. Further, we are planning to increase the number of base stations to 40-50 by the end of this year. The project was started in partnership with Idea Cellular and GSM Association's Development Fund.

You have embarked on a rural broadband project. What are the developments in this regard?
We launched the 'Gramjyoti Rural Broadband Project' in Vadugambadi in Tamil Nadu, 60 kms from Chennai. It is basically a pilot project, which seeks to introduce the benefits of WCDMA/HSPA technology in rural India and connect communities to high-speed Internet services. And, eventually, we plan to bring about 1,00,000 villages under the network. Villages in the Gramjyoti project area will be able to use broadband applications such as telemedicine, e-education, e-governance, and access high-speed Internet services on the 3G platform.

What are the challenges you are facing in the Indian market?
3G should be the next big trigger in the current year; otherwise it is going to be business as usual. Any delay in 3G is going to be a challenge. The sooner we get it the better. We are prepared to offer services in the network and multimedia services. We have recently acquired Tanberg for our multimedia business.

You have recently started hosting services. What has been the progress on that front?
We do a lot of hosting on VAS for operators. This is a new phenomenon. Basically it is like a payment exchange for our customers in India, as
well as abroad. The highlight of this initiative is that most of the operators signed up for this service. It is part of our managed services and gives operators easy access to services, allowing them to focus on their core business.