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India Wireless
Takeaways from Ericsson India Analyst Day
Ericsson India Analyst day – We recently attended Ericsson’s analyst day. The
focus was on 3G (timeline and opportunity), managed services (opex savings),
and LTE (timeline and opportunity). Key takeaways are as below:
Cost efficiencies through managed services – Ericsson claimed that the bulk of
its cost efficiency methods have already been employed in India, though there is
still some scope (but not too much) left. It recently signed up with Bharti for its
African operations. The company disclosed an opex savings of 20-25% from the
managed service model versus doing it in-house.
3G launch: Delayed from equipment scarcity – Contracts have been awarded
in 68 of the 71 areas (counting an operator winning in a circle as an individual
licensee) to four vendors - NSN, Ericsson, Huawei, and ZTE. Equipment shortage
(primarily for western vendors) has resulted in roll-out delays for incumbents’ since
the bulk of their contracts have been awarded to the Europeans vendors.
3G opportunity: May take time to ramp up – Ericsson is confident of the longerterm
data opportunity, though it believes ramp up may take some time. Besides,
with only 5Mhz of 2.1GHz spectrum allotted, it admitted that the opportunities for
significant increase in data revenues may be limited especially if operators get into
spectrum sharing (Bharti and Idea have been talking about this). Ericsson claimed
that 90% of cell sites currently are microwave linked and operators are likely to
wait for evidence of data pick-up before increasing backhaul capacity (read fiber).
LTE: Launch and constraints – A commercial launch is unlikely before 2HCY11.
Handset prices is a constraint for large scale adoption and initial phase should
therefore see focus on lower priced LTE dongles (US$50). Ericsson expects
overlay of multiple-technologies (3G, LTE) on handsets to help increase volumes,
reducing prices, but this could take sometime. We therefore believe that combining
2G voice with LTE could be one of the options pursued by the BWA winners.
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