NSN predicts price erosion will escalate

Nokia Siemens Networks is not expecting fierce competition for telecoms network gear contracts to ease, as rivals continued to slash prices, a Reuters report said.

'It's still an extremely competitive market, and vendors are not making huge profits,' Christian Fredrikson, head of Nokia Siemens Networks Asia Pacific, told Reuters in an interview. 'There's price erosion all the time -- it's not easing in any way.'

Ericsson, Nokia Siemens and Alcatel-Lucent are the leading players in the telecoms network market, but have been increasingly challenged by Chinese vendors, including Huawei Technologies and ZTE in the last few years, the Reuters report added.

With aggressive pricing, Huawei took the No. 4 spot in the global telecom network gear market in the January-March quarter, bypassing Nortel Networks and Motorola, according to research firm Dell'Oro.

Ericsson had predicted recently that the market was set to improve and price competition likely to ease.

Fredrikson said Nokia Siemens would not compete on price alone. The company has walked away from several deals in the past as it focused on improving profit margins and cash flow.

In emerging markets such as India, which are enjoying phenomenal wireless growth, ARPUs are likely to fall further as telecoms operators seek to expand their subscriber bases to the poorer rural areas.