WCA January 2008

Telecom news

Nokia said it expects market share at roughly the same level in fourth- quarter 2007. Ms Lagorce reported that the average selling price of a handset fell to $118 from $130 in the second quarter as the proportion of phones sold in the under-$43 segment increa- sed significantly. “Our main competitor seems to be steering away from that market,” said Nokia’s president and chief executive Olli-Pekka Kallasvuo during a conference call with MarketWatch . He said, however, that the point is not for his company ‘to be as cheap as possible but to be cheaper than [its] competitors.’ Sales at the telecom equipment joint venture Nokia Siemens Networks rose 7% sequentially to $5.3 billion in the third quarter, for which the venture reported an operating loss of $172.7 million. There is no year-earlier comparison because the Finnish- German venture began operating only in second-quarter 2007. And Networks said on 25 th September that it had won a long-term maintenance order from Deutsche Telekom for Juniper Networks’ routers in the German company’s broadband network. Financial details were not disclosed, but Networks said the deal would significantly cut the operating costs of the network. Nokia is buying US navigation- software maker Navteq Corp for around $8.1 billion. Chicago-based Navteq, which has some 3,000 employees in 30 countries, maintains digital maps for licensing to global positioning systems and websites. Olli-Pekka Kallasvuo, Nokia’s CEO, said that location-based services are one of the cornerstones of Nokia’s Internet services strategy. The acqui- sition of Navteq is another step toward Nokia ‘becoming a leading player in this space,’ Mr Kallasvuo told reporters in Stockholm, on 1 st October. The Navteq map data business is to be organised as a Nokia group company but operate independently. Elsewhere in telecom . . . Alcatel-Lucent on 24 th September announced that it had won orders from subsidiaries of two Chinese mobile phone operators to provide network optimisation services. The Paris-based equipment maker said three subsidiaries of China Mobile had selected it to optimise their wireless networks in Shanghai, and ✆ ✆ ✆ Nokia has been making news on other fronts:

in Guizhou and Shanxi provinces. For the China Unicom unit Inner Mongolia Unicom, Alcatel-Lucent would optimise a network in Inner Mongolian province. The value of the contracts, which were to be fulfilled by the end of 2007, was not disclosed. Motorola Inc (Schaumburg, Illinois) said on 7 th October that it had been awarded two contracts to provide a Taiwanese telecom operator with WiMax network infrastructure. WiMax technology makes possible Internet service facilities similar to the Wi-Fi ‘hotspots’ found in airports and other public places, but over a much broader area. The US telecommunications equip- ment giant said it will provide WiMax equipment to Far EasTone Telecom, which commands about one-third of the wireless mobile market of Taiwan. Chicago Tribune reporter James P Miller wrote that the deal was made in connection with Far EasTone’s role in the national Mobile Taiwan (or M-Taiwan) project intended to make wireless broadband access available almost everywhere on the island of Taiwan. Motorola did not disclose financial terms of its participation. Following its successful bid for GSM-1800 licenses in four regions of Siberia, Russian CDMA-450 operator SkyLink announced it now intends to develop a CDMA/GSM (code division multiple access/global system for mobile communications) multi-standard network, with the first GSM services to launch this year. As reported in TeleGeography (26 th October), SkyLink’s director general Gul’nara Khasianova told an industry conference that her company plans to implement CDMA/ GSM services in most regions of Russia by 2011, and will participate in further upcoming GSM spectrum auctions to further this goal. Ms Khasianova also told TG that SkyLink is considering three addi- tional regions in which to obtain GSM concessions and construct networks, utilising CDMA roaming to further extend its national coverage. She estimated the cost of GSM network construction in one region at around $10 million, but predicted that the outlay would be recouped within five years. SkyLink, part of the Sistema group, already provides CDMA2000 1xEV-DO wireless ser- vices in the 450MHz frequency band.

The Russian wireless provider MegaFon plans to launch a commercial 3G (third-generation) mobile network in Moscow in the second half of 2008, a company spokesperson has told the media company RBC, which runs the business channel RBC-TV. MegaFon said on 26 th October that it is working with rival UMTS (universal mobile telecommunications system) license holders MTS and Vimpelcom to ‘clear the frequencies’ in the city. Earlier in the month MegaFon launched Russia’s first W-CDMA service, covering parts of St Petersburg. The French telecommunications company Iliad plans to build a fibre optic communications net- work throughout Paris, where it has its headquarters. Iliad said the five-year development of the $1.43 billion network would begin this year. Building and owning its own fibre optics network would permit the company to save on renting telephone lines from France Télécom, Iliad said. Any excess capacity on the new network would be leased to competitors. Michael Boukobza, Iliad’s chief executive, said at a 12 th September news conference in Paris: “Demand for bandwidth is showing no sign of abating.” Sweden’s Ericsson, the world’s biggest builder of mobile phone networks, took the industry by surprise with its 17 th October announcement of a 36% drop in third-quarter profit as some wireless operators were reported beginning to work together to limit costs. The company, which has 45% of the $35 billion market for mobile network equipment and software, said the downturn had been driven by weaker-than-expected demand in Europe and the US. Some operators in those two markets are pooling networks, and some new competitors are renting network access instead of building their own systems. Despite reassurances from Carl- Henric Svanberg, the president and chief executive of Ericsson, news of the bad quarter caused the company’s shares to drop 23.8%, to $3.11, in trading in Stockholm. At least some investors will have read into the announcement confirmation of a slowdown in demand for the new third-generation wireless networks being built for high-speed delivery of mobile data. The telecom industry is having to adapt as the growth in demand for mobile data continues to lag earlier market predictions.

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Wire & Cable ASIA – January/February 2008