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Mobile investments in India drive Ericsson’s growth in Q3FY15

https://www.flickr.com/photos/ericsson_images/9915675064/in/photolist-g7dqJU-g7cYNr-5CaRVs-7Qimra-9gRXZY-dK7RfY-dK2kmF-dK2k8F-oZoPGL-5C6As2-aefJT7-m95cF-7GEyBw-9cqRCX-9cqRk6-9cqR4H-9cqQLk-9ctUX7-9ctUFj-9ctUnY-9ctU6y-9ctTMu-9cqN8F-9cqMST-9ctS7o-9cqMmr-9cqM1K-9ctRiu-9ctR35-9ctQKN-9ctQsh-9ctQbw-9cqKk4-9ctPBS-9cqJL2-6wRQrs-6PB4K-4pXcTa-5PZMZ-kxU41-g8xr2-4pXLKj-5hD8Ay-6ZTCH-kq7b8c-kq7TNz-kq7TEt-5vWvm3-h88WXA-dYjkUq

Telecom network equipment maker Ericsson saw an 81% growth (pdf) in regional sales in India for Q3FY15. Overall, the company saw a 3% growth in sales YoY (year-on-year), and while sales decreased in Japan, Russia and Brazil, this was offset by better sales growth in India, Southeast Asia and Oceania.

Mobile data drives growth:

The increase in sales in India is likely due to telecom networks updating their networks for 4G adoption across the country. TSPs are already late on the deadline for rollout obligations, which ended in September. According to Ericsson, the high level of mobile broadband investments in India, which started in the beginning of 2015, continued in the quarter with the main driver being mobile data traffic growth. This, among other things, ensure the rise in demand for the company’s managed services business.

Ericsson’s net sales for the quarter increased to 59.2 billion SEK from 57.6 billion SEK YoY, of which networks services accounted for 28.8 billion SEK, global services for 27.1 billion SEK and support solution for 3.3 billion SEK. In India, the demand for the company’s network services grew 120% YoY, while global services saw a growth of 46%. Demand for support solutions however declined by 26% YoY.

On a quarterly basis, India generated 3.63 billion SEK in sales for the company with network services bringing in 2.43 billion SEK, global services accounting for 1.08 billion SEK and support solutions at 0.11 billion SEK. Overall, India came in 3rd in the top 5 countries for sales, a list led by the US and China, with the UK and Italy coming in 4th and 5th respectively.

Other highlights:

– Deployment of 4G in mainland China slowed as the market has matured. For the networks part of its business, all regions saw a decline in growth except for India and Southeast Asia.

– Focus on 5G networks and Internet of Things has increased, while video continues to be the main driver of network traffic.

– The company plans to exit its modems business, although the segment saw marginal growth. Note that this was first reported in September last year, when several media outlets mentioned that this could cause over 200 job cuts in India and over 1,500 worldwide.

Ozone partnership: In November last year, public Wi-Fi service provider Ozone Networks signed a Small Cell as a Service agreement with Ericsson to provide a neutral Wi-Fi network across India. In the first stage of this project, Ozone would get 30,000 Wi-Fi access points, network management nodes and tools, along with various monetization options for the network, from Ericsson. Other than this, Ericsson currently provides TSPs with network managed services, network rollout, network design and optimization and support services among others.

Image source: Ericsson

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