JOHAN NILSSON
I nabbed an opportunity this morning to speak with Jan Frykhammar, executive vice president and chief financial officer of Ericsson, the global telecommunications-equipment maker whose network products handle roughly 40 per cent of the world's cellphone calls.
The company is responsible for most of the major 4G long term evolution (LTE) rollouts taking place in the world today: It has contracts to build LTE networks with Verizon and AT&T in the United States, as well as in several Nordic countries, including its native Sweden.
The company, in short, is massive: In 2009, it's global sales revenue was $30.7-billion; it has roughly 82,500 employees; and operators in 175 countries.
The company released its first-quarter financial report this morning (where were disappointing, analysts said, with a slide in profit of 26 per cent from this time last year). That's why Mr. Frykhammar was talking.
Here's an edited transcript of our conversation (I've shortened his answers and my rambling questions):
How will the roll out of 4G networks change the global telecommunications landscape?
The most important trend that we were all is seeing, and you are as well, and that is the enormous uptake of mobile broadband and of course the explosion of data traffic enabled by smart phones. And that is already happening already with HSPA or mobile broadband networks. I think with the 4G networks, which will improve the bandwidth even more, I think there will be even more exciting services that can be launched, and also these networks being used in new types of applications.
In fact, as a company we have, if you will, a vision that by 2020: that if today, there are 4.8 billion mobile subscriptions and 400 - 500 million mobile broadband users; we believe that, in the range of 2020, 10 plus years from now, there will be 50 billion connected devices that will be connected to different mobile broadband networks.
How have advanced smart phones changed the way Ericsson thinks about building networks?
I usually make this comparison, that if you take a traditional mobile phone that is more voice centric, from a user point of view, it probably consumes some 1 to 2 megabits of capacity each month. While if you look at a smart phone, like an iPhone or any other of the smart phone devices that are now entering into the market, it seems like an average consumption for a user is 400 to 500 megabits per month. Whilst a laptop user is between 1 to 2 gigabytes.
This is, of course, creating enormous pressure on the data. And in fact these 400 or 500 million users of mobile data are actually taking up more capacity in the networks than all the voice users. So of course we are thinking about that when it comes to designing our products and our solutions.
What does the deluge of data means for carriers, for telecom equipment makers?
For Ericsson, as a partner or as a vendor to them, it is of course important that we are there to support them when it comes to managing all of this data traffic and improving the quality of the user experience and also developing products that can handle all of this capacity. (He said he can't answer for the carriers, which are Ericsson's clients. - Iain)
You acquired Nortel Networks' wireless assets for $1.13-billion. They're considered Nortel's crown jewels. Why did you want them and what do you plan to do with them?
When it comes to the assets that have been auctions or become available from Nortel, I think it's important to see that the CDMA assets in North America are obviously something we're extremely interested to get. And that has a lot to do with our market position. We have had, as a company, more than 10 years, an ambition to strengthen our position in North America, so that was obviously one important aspect.
The other important aspect was and is of course that we want to make sure that we can support customers in the transition from CDMA to LTE in a very good way. The third rational that we think that the crown jewels of Nortel, both in Ottawa and Dallas, was the skill set of the people. We were very much after the skilled engineers. We believe that we have a good cultural fit between the companies. And we also acquired, as you know, an important R&D competence when it comes to LTE.
We have also announced recently, it was yesterday, that we have acquired Nortel's 50 % of a joint venture in Korea with LG. And that is also an acquisition that will make us get access to very important telecommunications market in South Korea, where we are not as strong today as we would like.
What is your impression of the North American markets, specifically Canada, where the government has tried to inject more competition into the wireless sector?
North America, the U.S. and Canada, are both very important markets from Ericsson's point of view… When it comes to the competitive dynamic in Canada, I pass on that one.