Ericsson mulls purchasing operator networks

Having succeeded in becoming the largest managed services provider to the telecoms industry, Ericsson has revealed that it is now interested in acquiring networks from operators wanting to offload this asset to a third party.

According to Valter D'Avino, Ericsson's VP of managed services, the company could "eventually take over part of the network with a [financial] partner and transform" the Capex and Opex requirements.

"Ericsson isn't interested in pure leaseback that is one-to-one. What would be interesting for us is real sharing, using the transmission capability to serve other customers as well," said D'Avino.

However, the company, which has signed over 300 managed services contracts since 2002 making it responsible for 750 million subscribers worldwide, stressed that it would only consider acquiring networks in partnership with financial investors.

Of note, said the Ericsson exec, is that Africa was proving to be a promising area for managed services. "We are discussing it especially with multi-country operators," he said, mentioning Emirates Telecom's Etisalat, Zain and Bharti Airtel.

Ericsson announced it had booked 15.8 billion kronor (US$2.3 billion) in sales of managed services in the first nine months of the year, a 28 per cent increase from a year earlier. Third-quarter revenue from managed services climbed 46 per cent to 5.2 billion kronor, boosted by the Sprint contract in the US.

Separately, financial analysts have been posting upbeat assessments of Ericsson's future prospects following a recent survey that indicated that two-thirds of mobile operators around the world face network capacity problems.

"I would expect Q4 and the first half of next year to be strong," said Pierre Ferragu, an analyst at Sanford Bernstein. "India is back on track, China is doing well, the US is still strong and I think Europe is coming back very strongly."

Ferragu added that concerns over price wars between Ericsson and Huawei were over-exaggerated, with the Swedish manufacturer continuing to enjoy strong margins with further cost cuts to come.

For more:
- see this Bloomberg article
- see this Reuters article

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