The Players
It was a special year for Ericsson as it has shown almost 100% growth to be on top of the table. The Asia Pacific revenue for Ericsson grew by around 30-35% in 2006 with high-level activity in Australia, India, Indonesia, and Japan. Even in other emerging markets the company did well in terms of new and extension contracts in Bangladesh, China, Indonesia, Pakistan, and Russia, as well as in countries throughout Africa and Latin America.

Worldwide, Ericsson has restructured itself and the focus is more on services through multimedia and professional services division whereas the networks division will focus on mobile rollouts. And, recently, the company has delivered its one millionth GSM base station.

The company has done well on the managed services front as it has majority of Bharti's managed services contract and also worldwide contracts. In terms of the size of the Bharti deal it was around $1 bn, and the first of its kind in the private sector depicting India's big role in the wireless infrastructure space. The focus was not only on increasing footprint but also on network capacity. The three-year services contract included: manage design, develop, and deploy coverage in all towns and cities and also focus in rural India. Also, Ericsson will upgrade the network with mobile softswitch (media gateway and MSC servers) that paves the way for an all IP network.

The company has also signed a three-year contract for GSM expansion in Maharashtra, Gujarat, Rajasthan, Madhya Pradesh, and Himachal Pradesh for Idea Cellular. Under the contract, Ericsson will provide radio access, microwave transmission, and next generation mobile softswitch network architecture, till November 2009. The company will also build EDGE network across the five circles.

The company also enhanced Expander solutions offering total site solutions including pre-configured radio base stations, antennas, power and installation systems, transmission solutions, and services. These reduce site, transmission, and network rollout costs, maximize radio performance, and speed up network while maintaining reliability.

On the innovation front, Ericsson along with Idea and GSMA, has teamed up to develop biofuels as a source of power for wireless networks in rural India. The first phase of the project is testing the feasibility of non-edible plant-based fuels such as cotton and Jatropha. The second phase will entail setting up a supply chain using locally grown crops to produce biodiesel to power between five and ten base stations in the Maharashtra region.

It was also a memorable year for Nokia India as the company managed to net $1 bn revenue in FY '06-07. This was all because of Vodafone Essar as Nokia had a complete monopoly and was also its number one client. Since Nokia Siemens Network is coming into existence on April 1, 2007, revenues of both Siemens and Nokia have been taken separately and in the next fiscal it will be a combined entity. Nokia and Siemens bring together two major wireless and fixed technology players, the Nokia Network Business Group and the carrier related businesses of Siemens Communications. The combined entity is focusing on radio access, broadband access, IP/transport, operations support systems, and service core and applications.

Nokia further extended managed services contract in twelve circles. Hutch will also utilize Global Network Solutions facility based in Chennai, and it will provide services like remote care, remote integration, consulting, planning, and optimization. Mid of the year, Nokia signed an estimated $400 mn contract with Bharti to expand its GSM/GPRS/EDGE network in eight circles and deploy a WAN India WAP solution across its network. As per the three-year contract, Nokia will cover all towns and cities in eight telecom circles of Mumbai, Maharashtra and Goa, Gujarat, Bihar, Jharkhand, Orissa, Kolkata, West Bengal, Madhya Pradesh, and Chattisgarh.

Recently, Idea signed expansion deals with Nokia Siemens worth $500 mn. Under the contract Nokia Siemens will expand Idea Cellular's network to cover population across six circles of Delhi, Haryana, UP (E), UP (W), Andhra Pradesh, and Kerala. The two-year contract includes the supply and services of GSM equipment, IN, VAS and circuit, and packet core equipment. Nokia also received expansion deals from BSNL.

In order to further strengthen its India activity, Nokia has expanded its R&D facility in Bangalore with the inauguration of a 210,000 sq ft development center in Bangalore. The center will focus on development work for software platforms and chipsets, and provide lot of support for wireless equipment manufacturing at Chennai.

FY '06-07 has seen a number of M&As in the wireless infrastructure space. On April 2, 2006, Alcatel and Lucent entered into a merger agreement. Completion of the merger occurred on November 30, 2006, and Lucent became a wholly owned subsidiary of Alcatel. Alcatel changed its name to Alcatel-Lucent. For Alcatel-Lucent, worldwide revenues for 2006 was at $16.2 bn. Worldwide, Alcatel-Lucent is #3 in the wireless space. The company also further strengthened its mobile position by acquiring Nortel Network's UMTS radio access business. The announcement happened on December 4, 2006, and it got completed on December 31, 2006.

As a combined entity, the company has clicked since Lucent had Reliance Communications whereas Alcatel had a strong incumbent presence. The combined entity has to increase its customer portfolio in order to give a good fight to both Nokia and Ericsson. The company is focusing on a complete suite for mobile communications like mobile radio, mobile solutions, and wireless transmission. In the wireless space, focus is on GSM/WiMax, CDMA, CDMA EV-DO, and wireless transmission. Focus is also on services such as maintenance, professional services, network integration, and network operations. The company has also formed an alliance with Intel for development of end-to-end solutions using the WiMax standard.

The company got expansion orders from BSNL for the Western region, and also bagged MTNL 2G/3G contract for supply of 2 mn lines in Mumbai. The company also bagged large expansion deals from Reliance Communications. In terms of wireless broadband, Alcatel-Lucent is one of the pioneers in India and has deployed successful trials in WiMax 802.16 Rev e with selected operators and is thereby comfortably poised to gain a strong foothold in the Indian market.

Motorola had two large deals: An expansion deal from Tata Teleservices, and 2G/3G deals from MTNL for Delhi circle along with Huawei. The deal is worth 2 mn lines and Motorola will take care of network deployment and maintenance services. The company is strongly banking on wireless broadband deployment with their key clients. Though the company has grown by around 80%, it has to seriously do some rethinking if it plans to move up the table with the coming of 3G. For managed services, the company has tied up with Wipro and plans to increase its services revenue.

ZTE, one of the surprise entries, has banked on its pricing strategy and this has helped the company make inroads in Tata Teleservices as well as Reliance Communications. From Tata Teleservices, it was the rural order whereas in the case of Reliance Communications it made an entry for around 1,000 plus BTS.

Siemens had Hutch Idea and Indian Railways as its clients. From Hutch, the company had expansion deals whereas Indian Railways gave the GSM deal. Siemens has also signed an agreement with Hutchison Essar for its music download technology Music 2 You that enables full-length title to be previewed, purchased, and downloaded on a handset. Nortel received expansion deals from BSNL and is presently focusing more on WiMax technologies, after its sell off of UMTS division to Alcatel-Lucent. Huawei bagged the Reliance Communication deal and is also present with Motorola for the MTNL Delhi deal. UTstarcom has bagged the IP CDMA deal from one of the leading operators.

Rosy Scene for Vendors
Even in the future, things look rosy for wireless infrastructure vendors as we have mobile expansion on 2G and 2.5G both on CDMA as well as GSM. Not only this, we are also expecting 3G finalization this year resulting in 3G deployment in FY '07-08 and beyond. All this will bring lots of cheer to wireless infrastructure vendors. Even mergers and acquisitions in the vendor space has made the market more competitive as nobody would like to be on the loser side as order numbers are decreasing, but their sizes are increasing multifold. On the 3G front, vendors are doing pilots and testing how things will work out before 3G RFPs (request for proposals) are being floated in the market. In future, due to 3G orders, we might see some realignment in the vendor space, and thus everybody is focusing on 3G and WiMax.

Pravin Prashant
pravinp@cybermedia.co.in