TeliaSonera has chosen Ericsson and Nokia Siemens Networks (NSN) to deploy its LTE networks in Sweden and Norway. Ericsson is supplying the core networks, and together Ericsson and NSN will provide radio equipment. NSN will also handle the multi-vendor integration services.
Notable in the announcement is that Huawei will finish installing TeliaSonera's LTE network in Oslo, but the Chinese company was not chosen to expand the network in other areas of Norway. The networks in Stockholm (Ericsson) and Oslo (Huawei) went live in December, but apparently that will be all from Huawei. As Huawei is now considered the world number two on the telecom equipment market, this is a big blow for the Chinese company. For NSN, it's a big win, as it has especially suffered from the market slowdown.
For Ericsson, the good news just continues. The Swedish company has profited from Nortel's implosion, taking over its CDMA, LTE and GSM activities in North America, has won several LTE orders and yesterday bought a major systems integrator in Italy, the company Pride with 1,000 specialists. As a result, Ericsson has strengthened its position on the North American market, become one of the leading players in LTE and expanded its potential revenues from services, making it less dependent on the cyclical equipment market.
The trends are also evident in the financial results. Looking at the listed companies, Ericsson's EBITDA margin is head and shoulders above the others. The market consensus points to an improvement in Ericsson's EBITDA margin to 14 percent for 2009, versus 12 percent in 2008, while Alcatel-Lucent and ZTE are down around 8 percent. Ericsson's revenue growth, while supported by acquisitions, is estimated at 3.6 percent for 2010, almost double the rate of Alcatel-Lucent. ZTE, which is much smaller, is expected to post 22 percent growth, well ahead of the market.
In short, Ericsson will likely welcome NSN's win in Norway, as the threat for Ericsson comes mainly from China in the form of Huawei and ZTE, and less from its sluggish European competitors Alcatel-Lucent and NSN.
