Ericsson signs $850 million contract in China

Ulhas Joglekar uvj at vsnl.com
Wed Jun 20 19:34:34 PDT 2001


Saturday 16 June 2001

Ericsson signs $850 million contract in China STOCKHOLM: Swedish telecoms equipment maker Ericsson said on Friday that it had signed a strategically important $850 million agreement to supply equipment and services to Chinese telecoms operators. The outline agreement concerned GSM, CDMA and Multi-Service Networks for Jiangsu Mobile Communications Co, China Unicom Jiangsu Branch and Chila Telecom Group Jiangsu Corporation. Ericsson said that the agreement was of strategic commercial importance, because China could soon surpass the US to become the company's biggest single market. Analysts estimate China has 100 million mobile phone users and is likely to have 300 million by 2005. "There is a good possibility that China can become Ericsson's biggest market," said Jan Malm, the head of the company's China unit. "In China we see growth within the whole telecoms sector and predict no slowdown within the next few years. At the same time, things in the US are not that well," he added. The US last year was responsible for 12 per cent of Ericsson's total sales, while sales in China last year came in at 7 per cent, Malm said. "The signing of the frame agreement shows a continued strong development for Ericsson in China and Asia," said Ericsson Chief Executive Officer Kurt Hellstrom. "With today's order we have got into the economy of one of the most important provinces in China -- Jiangsu," Malm said. China will probably award licences for third generation mobile telephones no sooner than the end of 2002, he said. In mid-May China Unicom handed out $1.46 billion in contracts for the country's first mobile phone network based on the second-generation CDMA (Code Division Multiple Access) standard, which will cover 15 million subscribers. Foreign companies scooped up the biggest deals to supply equipment for the network, including Motorola with a contract worth $407 million, Canada's Nortel Networks getting $275 million worth of business and Ericsson closing a contract worth $200 million. Ericsson shares were trading up nearly 1 per cent at 1340 GMT, resisting a tech share sell-off on a series of profit warnings, which saw the region's benchmark Stoxx Nordic index come off 1.4 per cent, underperforming the FTSE Eurotop 300 index by 0.1 per cent. Ericsson's Finnish rival Nokia was off 3.4 per cent. Since the start of the year shares in Ericsson have fallen 49.3 per cent, underperforming the DJ Europen technology index by 22.6 per cent. The company posted total revenue of 273.6 billion Swedish crowns ($25.9 billion) for the year to end December 2000, a 27 per cent increase on the previous year. (Reuters)

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