Almost 50 per cent of Ericsson’s publicly announced infrastructure contracts during H108 were related to WCDMA, according to research conducted by Comm.

Ericsson announced 35 infrastructure contracts in the six months to end-June 2008, 17 of which were related to the delivery of WCDMA equipment. Of those, 14 contracts, or 82 per cent, also extended to the delivery of HSPA infrastructure, indicating the traction the WCDMA upgrade technology is enjoying in markets around the world.

In comparison, Motorola publicly announced 30 infrastructure and enterprise solutions contracts during H108, only one of which was related to WCDMA infrastructure. Motorola has been the largest proponent of WiMAX technology, and during the six months to end-June recorded four WiMAX contracts, including a deal to supply 198,000 WiMAX customer premises equipment devices to Wateen in Pakistan, announced at the end of January 2008.

Motorola also witnessed strong deal flow in the area of TETRA, the terrestrial digital radio technology, with six contracts being announced with clients including airports, city municipalities and healthcare organisations. A full list of contract awards for Ericsson and Motorola in H108 will be included in the February issue of Comm.

Given the global economic slowdown, industry analysts and commentators have suggested that equipment vendors are set to be negatively impacted in 2009, though operators in emerging markets such as the Middle East and Africa are set to be less affected than those in more developed regions, resulting in a smaller fall-off of CAPEX investment.

Speaking on the back of the announcement of Q308 results last year, Ericsson CEO Carl-Henric Svanberg said the business in the Q309 had not been impacted by the financial turmoil, and said he believed customers were generally financially strong.

“We have a positive longer-term view for our industry, however, as we look into 2009, we continue to plan for a flattish market, and we have measures in place also for tougher conditions,” Svanberg said.

Ericsson is set to report Q408 and full year results January 29, while Motorola is set to follow suit on February 2.

At the time of going to press, Nortel had not yet officially responded to the notice it received from the New York Stock Exchange with respect to what the Canadian vendor was going to do about its depressed share price, which has traded below US$1.00 in value for several months, against NYSE rules. While some of Nortel’s problems are quite specific to the vendor, others are more general to the telecoms equipment manufacturing sector, and Comm. reviews the level of trouble for other suppliers

Nortel CEO Zafirovski is under pressure and running out of time as his options to keep the vendor afloat appear to be narrowing rapidly

Beleaguered telecoms vendor Nortel continues to fight for its survival, having been forced to review its stock market listing on the New York Stock Exchange (NYSE), given its depressed stock price. In an email to Nortel staff seen by Comm., Ronald Alepian, the vendor’s vice president of corporate communications confirmed last month that on December 10 the vendor had received notice from the NYSE that Nortel’s stock had fallen below the continued listing standards.

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Motorola has announced that it will further reduce its workforce in 2009 by approximately 4,000 positions. This reduction will include approximately 3,000 positions associated with the Mobile Devices business and approximately 1,000 positions associated with corporate functions and other business units. The workforce reductions, which were announced yesterday, are expected to begin immediately and are incremental to the 3,000 workforce reductions previously announced during Q408.

Motorola’s co-CEO Sanjay Jha says the company is making good progress in developing smartphones for 2009, despite quarterly handsets shipments dropping from 40.9 million units in Q407 to 19 million units in Q408

Motorola estimates that these combined workforce reductions are expected to result in additional annual cost savings of approximately US$700 million in 2009. The savings from the latest actions, together with the US$800 million of savings from other actions announced during Q408 are expected to result in aggregate cost savings of US$1.5 billion in 2009.

“Together with these actions and the announcements made in the fourth quarter, the Mobile Devices business expects to recognise annual cost savings of approximately US$1.2 billion in 2009,” said Sanjay Jha, co-chief executive officer of Motorola. “Additionally, we are making good progress in developing important new smartphones for 2009 and are pleased with the positive response from our customers to these new devices,” he added.

With respect to preliminary Q408 results, Motorola announced that during the period, Mobile Devices shipped approximately 19 million units. Motorola stated that sales were adversely impacted by continued weakness in end-consumer demand and customer inventory reductions. By comparison, in Q407 Motorola shipped 40.9 million devices.

Motorola announced it ended the year with a total cash position of approximately US$7.4 billion, with total sales for the fourth quarter expected to be in the range of US$7.0 billion to US$7.2 billion.

Nortel Networks yesterday filed for bankruptcy protection, citing the global financial crisis and recession as reasons that compounded its financial challenges and directly impacted the company’s ability to complete the transformation programme underway since 2005.

Nortel owes more than US$3.6 billion in bonds, with US$1 billion in debt coming due over the next two years

Last month Comm. reported how Nortel had received notice from the New York Stock Exchange that the vendor’s stock had fallen below the continued listing standards. Nortel’s average closing price on the exchange had been under US$1.00 for 30 consecutive trading days and as such the company needed to either remedy this or face the possibility of being delisted. Shares in Nortel closed January 13 at US$0.32 cents, having fallen 97 per cent over the past 12 months.

Nortel said that it owed more than US$3.6 billion in bonds. Those bondholders are being represented by the Bank of New York Mellon as a trustee. Nortel is also seeking bankruptcy protection in Canada, while certain of the company’s EMEA subsidiaries are expected to make consequential filings in Europe. More than US$1 billion in debt is coming due over the next two years, a situation which was also a factor in Nortel seeking bankruptcy protection at this time.

“Nortel must be put on a sound financial footing once and for all,” said Mike Zafirovski, Nortel’s CEO, in a statement. “These actions are imperative so that Nortel can build on its core strengths and become the highly focused and financially sound leader in the communications industry that its people, technology and customer relationships show it ought to be.”

Nortel said that it has US$2.4 billion in cash on hand to finance its operations.

The viability of mobile resellers and virtual network operators in the Middle East continues to be questioned by analysts, though answers are imminent given the impending launch of commercial MVNOs in Oman during the course of Q109. Majan Telecom and Friendi Mobile are the two companies entrusted with proving the business model for MVNOs in the region, and while he remains guarded about the finer points of his company’s market entry strategy, Majan Telecom’s CEO, Niklas Nielsen outlines how his organisation is set to do something never before seen in this part of the world

Niklas Nielsen is confident the MVNO business model will be vindicated in Oman, though he questions the market’s ability to support more than two resellers

Both Class II reseller licensees in Oman know it – being first to market will drastically improve either company’s prospects for success. As a consequence of this, both Majan Telecom and Friendi Mobile are working frantically behind the scenes to ensure their brand name, offering, and association with the latest business proposition to launch in the region since 3G services, hits the market first.

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