Ericsson up on network upgrades & management contracts

Swedish equipment vendor Ericsson turned in a strong set of figures for the third quarter, notching up an increase in net sales of 17 per cent year on year to SKR55.5bn (€6bn), while net income edged up six per cent to SKR3.8bn.

Growth was driven by continuing demand for mobile broadband infrastructure and increased services revenues, with Ericsson maintaining its position as a leading player in the managed services space.

Networks sales for the quarter increased 25 per cent year-over-year on the back of strong sales in packet core, IP routers and microwave-based backhaul, while a sequential decrease of three per cent is due to reduced CDMA sales in North America, which is likely to be a continuing trend as carriers converge on LTE.

Lower margin network modernisation projects, especially those in Europe, continue aplenty with old GSM and WCDMA radio base stations starting to be replaced with multi-standard radio models. Meanwhile, Ericsson believes that 3G rollouts in India already peaked in the second quarter.

WCDMA/HSPA will remain the leading mobile access technology for many years to come, the company said.

Ericsson’s leadership in the managed services space continued, with sales increasing one per cent year on year but 12 per cent sequentially, to SEK5.3bn, driven by Brazil, Germany, Italy, UK and the US, as well as a large Bharti Airtel deal in Africa.

The company has also been on the acquisition trail, picking up OSS/BSS firm Telcordia in June, M2M player Telenor Connexion in August, and taking a stake in Nortel’s patent portfolio as part of a consortium in July.

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Ericsson’s joint venture figures continue to make less encouraging reading, with chip unit ST-Ericsson reporting a widening loss for the quarter, which grew 74 per cent year on year to $211m. Handset venture Sony Ericsson hit an income of zero, down from a profit of €49 in the same quarter in 2010.

Rumours currently abound that executives at Ericsson have acknowledged that the handset unit has more in common with Sony than with the Swedish firm and as a result Sony may be looking to buy Ericsson’s half of the business.