HindustanTimes.com

Monday, August 25, 2003

Ericsson wins $600 mn China order, sees more

Reuters
Stockholm, August 20

Sweden's Ericsson, the world's leading mobile network equipment maker, said
on Wednesday it won a $600 million deal from a unit of China Mobile and saw
more business coming from the recovering Chinese market.

Ericsson has been in the red for more than two years because of the rapid
global decline in investment by operators, but is aiming for black figures
sometime this year.

A recovery of demand in China, which together with the United States are
Ericsson's top two markets, would be good news for the company which has
already decided to more than halve its workforce to adjust to the current
market weakness.

"We see a recovery from last year. The drivers are the continued strong
subscriber growth and traffic growth, which is increasing quicker than
expected," said Jan Malm, who runs Ericsson's China operations.

Malm said that Ericsson expected more contracts from China in 2003, though
not of the same magnitude as the one from China Mobile. "We have a number of
them in the pipeline," he said.

The China forecast stands out against a more gloomy global investment
picture. Ericsson has said it expected global demand for mobile systems this
year to decline more than 10 per cent in dollar terms against 2002.

The $600 million contract announced on Wednesday came from Guangdong Mobile
Communication Corporation for equipment to increase the reach of its GSM
network to 36 million subscribers, Ericsson said in a statement. Deliveries
will start this year and end in 2004.

Guangdong Mobile is part of China Mobile, the world's biggest mobile phone
operator by the number of subscribers.

Malm said he also expected orders for the CDMA mobile network technology
from China Unicom. Ericsson's CDMA network business is making a loss
globally because its market share is small at four to five per cent.

But in China it is closer to 15 per cent and it is something that arch-rival
Nokia of Finland does not have.

The Asia-Pacific region accounted for 25 per cent of Ericsson's mobile
systems orders in the first half of 2003.

China brought nine percent of Ericsson's total orders in January-June worth
55.4 billion crowns ($6.62 billion), making it Ericsson's second biggest
market after the United States.

After 11 successive quarters of losses, Ericsson is now close to break even
thanks to the harsh restructuring.

© Hindustan Times Ltd. 2003.
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