Mobile infra market

Mobile infra market
The 3G WCDMA market is one of the busiest today in the world. First because it is a new technology and needs building a new network (radio and core), secondly because operators and vendors invested a lot in the technology and need to recoup their huge investments in licenses and R&D, thirdly because 3G is an opportunity to link together mobility and broadband to offer high added value services, and partly compete with fixed broadband technologies.

The latest forecast for the world 3G WCDMA market is at about $18bn in 2006, up 50%. That almost accounts for 50% of the total mobile infra market. Up to now, Ericsson, Nokia and Siemens control more than 60% of the market, but competition is increasing from Asian, US and smaller vendors that must catch the last opportunity to win substantial contracts. China is set to decide 3G licenses in 2006, and networks should be operational for the Olympics Games in 2008; India is also on the verge to launch 3G (BSNL could order some 12m 3G lines as part of its $4,4bn investment plan); and the US where several 3G WCDMA network deployments are pending. Price pressure will be strong, and vendors are ready to give up some margin points for footholds in future 2G and 3G markets. BSNL (India) deal with Nokia produced the largest negative impact on profitability this year, halving 3Q05 operating profit to 6,2%. Nortel also bid very aggressively for a contract issued by India's BSNL in 2004, generating respectively $160m loss in 2004 and over $110m loss this year. Vendors are threatened to be shut out for many years if they fail to win footholds in those markets. If Ericsson, Nokia, and Siemens are believed to be strong enough to stay in the game, smaller players, such as Nortel, Motorola, Lucent, Alcatel, NEC, Fujitsu are raising concerns. Huawei and ZTE are expected to succeed in their home country at least, but also in India and more generally in emerging markets. So, concentration is on the way and it will be interesting to look at which alliances will be made in coming months.