Ericsson confident of larger chunk of China TD-LTE business

Ericsson (NASDAQ:ERIC) expects to expand its share of China Mobile's TD-LTE business via the operator's upcoming tender for network gear, said an executive for the infrastructure vendor.

"Ericsson is confident that it will gain a much bigger share during China Mobile's new round of bidding," Eric Feng, executive vice-president of Ericsson North East Asia, said during a news briefing in Guangzhou, where he was quoted by China Daily.

Though he declined to provide a specific forecast, Feng said China Mobile's TD-LTE initiatives will significantly boost Ericsson's performance in China.

China Mobile recently disclosed that it will invest $6.7 billion in rolling out TD-LTE this year and expects to end 2013 with more than 200,000 TD-LTE base stations in 13 cities, up from the 20,000 base stations it had deployed by the end of last year. Technology Business Research predicted earlier this year that Huawei, ZTE and Alcatel-Lucent (NYSE:ALU) will land the highest shares of China Mobile's upcoming TD-LTE tender.

Citing figures from research firm IHS iSuppli, China Daily said Ericsson won an 8.1 percent share during the first round of bidding for China Mobile's TD-LTE tender in 2012, while Chinese rivals Huawei and ZTE won 23.8 percent and 22.1 percent respectively. Foreign telecom equipment vendors achieved less than a 30 percent market share in total during that bidding round.

Feng's comments regarding Ericsson's prospects in China are considerably more bullish than those made by Johan Wibergh, Ericsson's head of networks, who recently told FierceBroadbandWireless that local network vendors are already better positioned to gain from TD-LTE deployments in that nation.

Though Ericsson has more than 30 percent market share in 2G networks across China, its share in 3G is considerably less because it did not produce network gear for China's homegrown standard, TD-SCDMA. Not only is Ericsson lacking a 3G base to build upon, but so far 85 percent of contracts for TD-LTE trials in China have gone to domestic vendors, said Wibergh.

In a recent Reuters article, Michael Li, an analyst at China Everbright Research, predicted 60-70 percent of China's Mobile's upcoming LTE projects will go to Chinese suppliers because the bulk will be based on network upgrades.

Feng acknowledged that China Mobile is primarily eyeing upgrades to its 3G base stations in order to enable TD-LTE, and those sites have been largely supplied by Chinese vendors Huawei and ZTE. Ericsson's best hope, he indicated, is to convince China Mobile to deploy all new TD-LTE base stations rather than upgrade its existing network.

"We hope that China Mobile will consider deploying all of its 4G base stations via new construction projects because it's more efficient, powerful and has a similar cost to upgrades," said Feng.

Wibergh also indicated that competing with local vendors on any big procurement creates pricing pressures that make pursuit of market share less desirable for an outside supplier. Likewise, Zhao Hailin, an IHS iSuppli analyst quoted by China Daily, said Ericsson's equipment usually is more expensive than that of its Chinese rivals, making it difficult for the Swedish vendor to compete on price.

Ericsson continues to works its way into China Mobile's good graces, however. For example, the two recently trialed the City Site small cell, a four-meter tall panel that includes a base station and an antenna customized for hotspot coverage, according to PCWorld. Though China Mobile is testing the panel as part of its GSM network, it can also support 3G and LTE.

For more:
- see this China Daily article
- see this cellular-news article
- see this Reuters article
- see this PCWorld article

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