The future's broadband, despite lay-offs, says Ericsson

The accelerating switch to broadband network technology promised a bright future for telecommunications equipment makers, Ericsson, the world's largest such firm, said today.

The accelerating switch to broadband network technology promised a bright future for telecommunications equipment makers, Ericsson, the world's largest such firm, said today.

This was despite its decision to lay off 5,000 people this year in the face of an expected slow-down in roll-out of 3G and 4G networks, the company said.

Announcing year-end results, Ericsson president and CEO Carl-Henric Svanberg said four billion people now have mobile phones, thanks to a rise of 650 million new mobile subscriptions in 2008. "2008 was also a breakthrough year for mobile broadband," he said.

Svanberg said the long-term prospects for the industry remained good as network operators converted their networks to Internet Protocol (IP) technology.

He expected broadband internet revenues for fixed operators to grow from 20% to more than 30% of total revenues in the next five years. Mobile operators' data revenues, currently at some 20% of total revenues, are expected to grow even faster, he said. He expected the number of households with internet-based television to grow from20 million to 100 million in five years.

To cope, operators were speeding upconversion to all-IP broadband networks, putting in more broadband access, routing and transmission, and beefing up service delivery and revenue management systems, he said.

He said GSM is the most common mobile communications technology, but its growth was slowing as the faster 3G/WCDMA was accelerating. Mobile is also the communications technology of choice in developing economies, Svanberg said. They represent less than one third of global GDP but "significantly more" of the market for mobile network equipment, he said.

He said it was hard to predict how much consumers would cut their telecom spending, but he noted network operators were mostly financially healthy and their networks were "fairly loaded".

"To date, our infrastructure business is hardly impacted at all, but it would be unreasonable to think that this would be the case also throughout 2009," he said.

Ericsson's results showed an 11% rise in sales with operating profits rising 31% and earnings 22%.

Ericsson's results contrast strongly with Nortel's. The North American switch-maker filed for Chapter 11 bankruptcy protection last week.

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