WCA July 2009

Telecom news

The announcement, on 17 th April, that Nokia Siemens had again recorded an operating loss – of $97.2 million in the second quarter – was generally reported with a qualifier: this result was a 387% improvement over the Finnish-German company’s first-quarter 2008 results. This indication of the relative health of Nokia Siemens had been preceded, a few days earlier, by an even more important piece of information. Writing from Berlin in the International Herald Tribune , Kevin J O’Brien began with a question: Which two European companies run the biggest wireless networks in the world, with a combined 355 million customers? “If you are thinking of the top mobile operators – Vodafone, Telefónica, T-Mobile, or Orange – you would be wrong,” Mr O’Brien told his readers. The right answer: Ericsson, of Sweden, and Nokia Siemens Networks. (“Ericsson and Nokia Siemens Are Managing Just Fine,” 13 th April). His assertion would be hard to refute. Over the past six years, these wireless equipment makers have become two of the largest mobile network operators in the world as telephone companies hire them to manage the flow of voice, text, and data among their subscribers. According to the Tribune , mobile operators are not only sharing base stations and other hardware to save money, as Vodafone and Telefónica agreed to do for their European networks in March. They are also increasing their reliance on Ericsson and Nokia Siemens to operate their networks. In Britain alone, Ericsson manages significant parts, if not all, of the networks of 3, T-Mobile and O 2 . In March, Ericsson added Vodafone, its fourth mobile operator client in Britain. On the same day, Nokia Siemens said it had been hired by Orange, the mobile unit of France Télécom, to manage its British network. Mr O’Brien wrote, “The business of running and maintaining networks is becoming a significant source of revenue for the two companies. Ericsson, the world’s largest maker of network gear, generated $1.7 billion from managing networks last year, up 17% from a year earlier. That represents 7% of the company’s total revenue. Nokia Siemens does not disclose its revenue from network outsourcing.” According to industry executives, mobile operators ✆ ✆ in Europe, Asia, Africa and the Middle East are doing most of the outsourcing to this point. American companies have taken a go-slow approach, farming out the operations of only a few services, like text messaging or prepaid billing. But, one analyst told the International Herald Tribune , “The outsourcing of network management is definitely a growing trend. It will absolutely be a global phenomenon.” Two ambitious players are out ahead in a growing trend: the outsourcing of network management

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Wire & Cable ASIA – July/August 2009