Mobile broadband drives Ericsson revenue to grow 17 percent in Q3; India sales up 7 percent

Telecom equipment major Ericsson posted 17 percent increase
in group sales at SEK 55.5 billion in Q3 2011 as compared with SEK 47.5 billion
in Q3 2011.

Sales in Latin America, Northern Europe and Central Asia,
the Middle East, Sub Saharan Africa, China and North East Asia grew in double
digits. North America, Ericsson’s largest contributor, reported -6 percent
growth to SEK 12.1 billion in Q3 2011 from SEK 12.9 billion in Q3 2010.

 

India sales increased 7 percent year-over-year and
decreased -19 percent sequentially. India sales grew to SEK 2.3 billion in Q3
2011 from SEK 2.1 billion in Q3 2010.

 

Networks sales in India decreased sequentially due to slower
3G investments. The initial 3G rollouts reached a temporary peak already in the
second quarter 2011 following three quarters of intense deployments.

 

China and North East Asia sales increased 39 percent
year-over-year across all segments and with especially strong demand in
services and multimedia. Operator investments in the region are mainly driven
by the broad introduction of smartphones which has lead to continuous growth in
mobile broadband subscriptions and usage. 

Ericsson has
completed the first phase of the large-scale TD-LTE trial with China Mobile.

“Group sales in the quarter increased by 17 percent
year-over-year driven by a continued strong demand for mobile broadband as well
as increased services revenues,” said Hans Vestberg, president and CEO of
Ericsson.

Japan showed strong development in the quarter with a high
degree of capacity investments. In Korea, the LTE contracts with LGU+ and SKT
have both moved into deployment phase and LG-Ericsson is also implementing a
WCDMA/HSPA capacity expansion project in the Seoul metropolitan area.

 

South East Asia and Oceania sales decreased -3 percent
year-over-year and increased 23 percent sequentially, with contribution from
the Telstra LTE project which is now in deployment. Data traffic growth is 10
percent in the region and smartphone penetration is low. Overall profitability
for operators is declining due to diminishing voice and sms revenues.

 

North America sales decreased -6 percent
year-over-year. A positive uptake in the services and OSS/BSS businesses in the quarter could not fully offset the
impact from a slower networks business after a period of high operator
investments in network capacity. CDMA sales declined sequentially although it
increased year-over-year. There is a continued operator focus on commercial LTE
launches.

 

Latin America sales increased 64 percent year-over-year
with growth across all segments.

Operators invest in mobile broadband coverage as well as GSM
to meet increased data traffic. There were also good traction for transmission,
opto and IP. In the quarter, new IPTV deals were signed.

 

Northern Europe and Central Asia sales increased 49
percent year-over-year and decreased -23 percent sequentially. The sequential
decline is due to slower infrastructure and network rollout sales, mainly in
Russia, following strong operator investments in network capacity and coverage
during the first six months of 2011.

 

Western and Central Europe sales increased 7 percent
year-over-year, driven by increased volumes related to network modernization projects as well as
the managed services business. There is momentum for managed services and
network sharing as operators seek to reduce operating expenses.

 

Mediterranean sales increased 4 percent year-over-year.
Network modernization projects are underway across the region. Year-over-year,
network rollout and system integration showed a good development, reflecting
the ongoing modernization projects. Sequentially, Spain and Greece were
impacted by macroeconomic instability and in Northern Africa sales developed
slow due to political unrest.

 

Middle East sales increased 34 percent year-over-year.
The year-over-year comparison is easy due to a slow market in Q3 2010 following
supply constraints. Mobile broadband sales continued to develop positively
across the region. Operators are looking into opportunities to reducing their
operating expenses, resulting in a positive development for managed services
both year-over-year and sequentially. Political unrest continues to impact
sales development in the region.

 

Sub-Saharan Africa sales increased 40 percent
year-over-year, driven by both networks and multimedia. Operators invested in 3G network coverage in
preparation for expected increased data traffic. To reduce operating
expenditures, operators show interest in managed services.

 

Networks sales grew 25 percent year-over-year. The
sequential decrease of -3 percent is due to seasonality and reduced CDMA sales
in North America. All regions except North America, Northern Europe &
Central Asia, Mediterranean and India showed sequential growth in Networks. In
the quarter, all remaining effects from the earthquake and tsunami in Japan in
March this year on our supply chain have been eliminated and lead times are
back to normal.

Global Services sales grew 7 percent year-over-year and
sequentially and Professional Services, currency adjusted, grew by 13 percent
year-over-year. Managed services showed good development with increased sales
of 12 percent sequentially, following 24 new managed services contracts
reported in the second quarter. Segment Multimedia sales grew 11 percent
year-over-year and 8 percent sequentially, with good traction also this quarter
for revenue management in Middle East and Sub-Saharan Africa.

Increased global smart phone penetration, new devices and
the introduction of tiered pricing is driving continued mobile data traffic
growth. Mobile broadband subscriptions are expected to reach close to one
billion by year-end and to reach close to five billion by 2016.

By Telecomlead.com Team
[email protected]