Ericsson leads the LTE market by a wide margin, but rivals Huawei, ZTE and Samsung will gain ground in 2013
March 5, 2013
2013 will mark the first year in which telecom equipment vendors will leverage LTE revenues to compensate for declining legacy technology revenues (GSM and CDMA), bolstered by the continuance of LTE deployments in North America and surging deployments in China and Latin America. Before LTE revenues picked up in 2H12, most Tier 1 vendors saw infrastructure revenues slump compared to 2011, due to declining demand for GSM and CDMA equipment.
This special report assesses the LTE marketplace and ranks the leading vendors in LTE by revenue in 2012 as well as provides an outlook for 2013 based on TBR's estimates. This report will provide insights around three key areas:
· Which vendors led the LTE market, in revenue, in 2012, and what drove their success?
· What will the LTE market share picture look like in 2013, once operators in more regions start deploying LTE networks?
· What is the LTE market opportunity for telecom vendors beyond 2013?
Ericsson leads the LTE market by a wide margin
Ericsson took a commanding lead in LTE market share in 2012 due to its strong position with key operators in North America, Japan and South Korea. Ericsson is deploying LTE for five of the seven Tier 1 operators in North America: Verizon, AT&T, Sprint, T-Mobile and Rogers. Ericsson is deploying LTE for Softbank in Japan and all three Tier 1 operators in South Korea, LG U+, SK Telecom and KT. These operators were among the first adopters of LTE technology, and Ericsson's key position within these accounts allowed the company to pull far ahead of competitors in LTE revenue.
NSN benefited from strong operator spending on LTE in Japan, South Korea and Canada, but the vendor largely sat out of the first phase of deployments in the United States, which prevented the company from nearing Ericsson's market share.
In 2012 Huawei ranked third in LTE market share, but the vendor was prevented from becoming a bigger threat to Ericsson and NSN because the vendor is largely prohibited from doing business in the United States. However, TBR expects Huawei's LTE market share to increase in 2013 as its contracts in other regions, namely Europe and APAC, start to ramp up.
Alcatel-Lucent placed fourth, as the bulk of the company's LTE revenue stems from three operators —AT&T, Verizon and Sprint — that are also purchasing LTE from Ericsson. Alcatel-Lucent did not win LTE supply agreements with Japan- and South Korea-based operators, which prevented the vendor from placing among the top three.
Tier 2 LTE vendors Samsung and Fujitsu are supplying LTE infrastructure in concentrated markets. Samsung is most active in Japan, South Korea and the United States, but won deals with Reliance in India and 3 U.K. in 2H12, positioning the company to expand its market reach and challenge incumbents in Europe and emerging markets. Fujitsu participated in Japan's LTE rollout, primarily with NTT DoCoMo, and as these deployments wind down, so too will Fujitsu's LTE revenues, leading to a loss of market share in 2013.
ZTE is a major Tier 1 telecom infrastructure vendor, but the bulk of its wireless revenue remains tied up in legacy technologies such as CDMA and GSM, which it supplies in bulk to China-based operators. ZTE did not participate in LTE deployments in North America, Japan or South Korea, giving it the lowest market share rank. However, ZTE will start to gain ground in LTE in 2013, when China Mobile begins its massive deployment and other operators in emerging markets start to deploy LTE, though on a much smaller scale.
Ericsson will again lead the LTE market in 2013, but rivals such as Huawei, ZTE and Alcatel-Lucent will gain share
Capex budget guidance indicates North America-based operators will continue spending aggressively on LTE equipment in 2013, enabling Ericsson to once again claim LTE leadership. The Sprint Network Vision will continue to ramp up, benefitting Ericsson, Alcatel-Lucent and Samsung. Latin America will also fuel Ericsson's LTE revenues as the vendor secured more than 50% market share in the region for LTE deployments, locking in contracts with Une, Oi, Vivo, Telcel, Claro and TIM Brasil.
NSN enters 2013 with uncertainty around its long-term LTE prospects. With Japan- and South Korea-based operators putting the finishing touches on their LTE networks and shifting their focus from coverage to capacity enhancement, NSN will need to increase its focus on the U.S., leveraging its contracts with T-Mobile USA and U.S. Cellular to boost LTE revenue. Latin America will also contribute, as LTE rollouts are underway in Brazil, where NSN holds contracts with America Movil's Claro brand, TIM and Oi.
Huawei, Alcatel-Lucent and ZTE will see their LTE fortunes rise as China Mobile, the largest operator in the world by subscriber count, deploys TD-LTE. The operator plans to deploy 200,000 TD-LTE base stations in 2013 in a bid to jumpstart its 4G network, and these three vendors are likely to land the highest shares of the contract. Huawei and ZTE will benefit from select LTE rollouts in Europe, where China-based vendors will be aggressive on price to supplant NSN and Alcatel-Lucent from existing accounts.
Europe, China and India will ramp up LTE investment in 2014 and 2015, unlocking opportunities to grow LTE revenues
A multitude of operators in Europe delayed their LTE investments during the economic malaise that continues to grip the continent. Outside of the Nordics, carriers are delaying their LTE rollouts due to the uncertain economic and political environment. When LTE activity picks up in regions including western and central Europe, incumbents like Ericsson, Alcatel-Lucent and NSN will face greater competition from Huawei, which has made significant inroads since the 3G investment cycle and subsequent network modernization investment cycle. Carriers in eastern Europe are more price conscious and, therefore, more likely to select Huawei or ZTE.
TD-LTE deployments in India and ongoing rollouts in China will occur in 2014. Operators in India continue to face an uncertain regulatory environment and a crowded marketplace. Consolidation is needed before carriers embark on massive infrastructure deployments. In 2014 China Mobile will deploy an additional 150,000 TD-LTE base stations.