Ericsson Grows in India in 2011

Ericsson grew its full year 2011 revenues in India by 13.2 percent year-on-year to 9.76 billion Swedish Kronor (INR 71.3 billion/US$1.44 billion), with sales of 3G network equipment boosting business during the first half of last year.

Of Ericsson's 2011 revenues in India, network equipment sales accounted for 62.3 percent of sales, Global Services (including managed services) generated 32.2 percent and the Multimedia division (video, Service Provider IT technologies) accounted for just 5.5 percent.

India accounted for about 4 percent of Ericsson's total global revenues in 2011. (See .)

The vendor ended last year with 11,535 staff in India, up from 6,710 at the end of 2010.

But 2011 ended with a slump in sales, with Ericsson reporting revenues of just more than SEK1.5 billion (INR11.1 billion/$225 million) in the fourth quarter that ended Dec. 31, down 46 percent from the same period a year earlier and down 33 percent compared with the third quarter.

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Ericsson noted that market conditions were tough towards the end of 2011 but that prospects for its managed services are growing. "Regulatory uncertainty, particularly around mergers and acquisitions as well as spectrum trading policy, contributed to a slowdown in infrastructure investments [in India] in the second half of the year," the company noted in its full year financial statement. (See .)

"The telecom market is fragmented and cost competitive, which has created a renewed focus among operators on reducing operating expenses. This has resulted in a growing managed services business for Ericsson," the company added.

That uncertainty is set to linger while the new National Telecom Policy remains in flux. Some, but not all, industry executives and analysts expect business prospects to improve as 2012 progresses. (See Trends for 2012, IndiaWatch: NTP Faces Further Delay, , A Disappointing Year! and Fitch: All Is Not Lost.)

Ray Le Maistre, International Managing Editor, Light Reading