Ericsson Corp. remains upbeat on Asia Pacific market

The Jakarta Post, Shanghai, China

The Swedish-based telecommunications equipment maker Ericsson Corp. remains optimistic that the current weak market faced by the industry would be short-lived, especially when emerging markets such as Asia Pacific countries continue to show signs of improvement.

President of Ericsson Asia Pacific Ltd. Ragnar Back said in a recent seminar here that the Asia Pacific market still managed to grow despite a slowdown in the telecommunications industry worldwide.

"The whole telecommunications sector is having problems, but the emerging markets managed to make an exception. Look at India, China, Indonesia and so on. They're progressing very good," Back told reporters in Shanghai, adding that the company's market share in India's booming market had increased to 40 percent.

Such progress, Back added, was made possible due primarily to the fact that Asia still has a relatively low penetration rate in terms of infrastructure, compared to other established markets in the world, such as the U.S. and Europe.

Ericsson has been known as one of the world's leading wireless equipment providers, but the company, along with other firms in the telecommunications industry, was badly hit by the current unfavorable conditions in the global economy, which has been experiencing a slowdown in the past year.

The situation forced the company to suffer its first annual loss ever last year of 21.3 billion krona (around US$2.3 billion). As of the first semester of this year, it also recorded a loss of around $900 million.

The situation has been so bad that the company has even begun a restructuring package that will bring total employment below 60,000 by 2003, from 107,000 last year. It said its cost-cutting actions were necessary to enable it to return to profit next year.

In Asia Pacific however, Ericsson indeed has a strong market position, with the company's net sales in the region in the first half of the year reaching more than $2 billion, which accounts for almost 30 percent of its global sales.

China and Japan are currently among the company's top 10 markets in terms of sales and orders, with China ranked as the second largest market after the U.S. In China, over 50 percent of mobile subscribers are connected through operators whose equipment networks have been supplied by Ericsson.

In Indonesia, Ericsson supplies communications networks to all of the four national-level mobile phone operators -- namely Telkomsel, Satelindo, Excelcomindo Pratama and Indosat Multi Media Mobile (IM3) -- as a result of which around 8 million mobile phone subscribers in the country are connected to each other.

"In the region, we're definitely well-positioned. We are now the number one provider with over 30 percent of the market share in mobile communications infrastructure. And we intend to stay that way," Back said.

He added that things would be even better now that the economy was heading toward recovery. As of June, there were more than 300 million mobile subscribers in Asia Pacific countries.

Ericsson is present in virtually all Asia Pacific countries, with its regional head office being in Hong Kong, and 11 market units located in Australia, China, India, Indonesia, Japan, Malaysia, Singapore, South Korea, Taiwan, Thailand and Vietnam.

According to Back, a strong grip in the Asia Pacific market would prove crucial as the region's mobile phone subscriber growth has been and would remain the fastest growing in the world.

It is expected that mobile phone subscribers in Asia alone will account for some 50 percent of the global market, which is projected to reach 1.8 billion subscribers by 2007.

Ericsson is shaping the future of Mobile and Broadband Internet communications through its continuous technology leadership.

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