Why Is India an Important Market for Ericsson?
Ericsson Shares Fall after Weak 1Q16, Restructuring Announcement
Emerging markets are important for 4G penetration
In 2015, the telecom industry saw a massive transition from 3G to 4G networks. While the majority of subscribers in the United States and Europe are already on 4G networks, telecom companies are targeting China (FXI) and emerging markets (EEM) to increase penetration.
Ericsson (ERIC) is expanding its presence in India (INDA) and has announced major investments and deals. Ericsson’s global president and CEO, Hans Vestberg, stated that India will play a key role in the company’s growth strategy in terms of market, resources, and investments. This means the company will increase its investments in the country, expand its employee base, and diversify its product offerings in the information and communications technology (or ICT) space.
India’s potential in mobile broadband
Indian mobile operator BhartiAirtel and rival firm Vodafone (VOD) have successfully deployed 4G networks across the country, whereas peer companies like Idea Cellular and others will follow soon. This would create demand for more network equipment. Telecom equipment providers are preparing themselves to fulfill this likely increase in demand.
Ericsson is looking to invest in ICT products such as media, broadband, and cloud while rival Alcatel-Lucent (ALU), which was recently acquired by Nokia (NOK), is planning to diversify into verticals such as energy, transportation, and government.
While Ericsson (ERIC) was slow to secure contracts for the 4G LTE networks, it hopes to be ready for 5G (fifth generation) by 2020. It anticipates that 5G technology will support the company’s vision of creating a networked society as the Internet becomes increasingly present in day-to-day life.
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