Light Reading

Size Matters in 3G Wireless

LR Mobile Column
LR Mobile Column
LR Mobile Column

A triumvirate of vendors – Ericsson AB (Nasdaq: ERIC), Alcatel-Lucent, and Nokia-Siemens – looks set to control almost 70 percent of the $56 billion global wireless infrastructure market, finds the latest report from Unstrung Insider.

The report, Vendor M&A Frenzy: What Happens Next, analyzes the impact of consolidation in the cellular network equipment sector and assesses likely growth segments in a market with modest overall revenue prospects.

The economic logic for consolidation has long been compelling. With too many vendors, fierce price-based competition, and the risk that this market could degenerate into a low-margin fistfight, a round of M&A was inevitable. Recent downward pressure on operating margins has accelerated the process.

Achieving greater scale is the key objective. Scale directly influences a vendor's ability to invest in research and development, optimize the supply chain and manufacturing processes, achieve greater geographic diversity, and ultimately to produce a profit.

Long-time market leader Ericsson shows why scale, when expertly managed, wins out. The Swedish vendor has been able to maintain higher profit margins than its smaller competitors while retaining, and even gaining, market share. As the only truly global vendor, it is well positioned for each regional uptick in spending. It also enjoys the local presence to begin creating what could become the world's leading professional services organization to fixed and mobile telecom operators.

The combination of Nokia Corp. (NYSE: NOK) and Siemens AG (NYSE: SI; Frankfurt: SIE) is a wireless powerhouse in the making, and looks capable of challenging Ericsson for top spot in mobile network equipment. The one glaring gap in the company's portfolio is the U.S. market, which is set to boom following the recent spectrum allocations.

Alcatel-Lucent is dominant in CDMA2000 via Lucent Technologies Inc. (NYSE: LU)'s portfolio and established in GSM through Alcatel (NYSE: ALA; Paris: CGEP:PA)'s business, but it lacks a clear-cut strategy for UMTS. While the addition of Nortel Networks Ltd. 's UMTS division will enhance its combined product portfolio, the short-term challenge of integrating 3G equipment from four different companies looks formidable.

The current M&A wave could also be interpreted as evidence that the world got too big for the Euro- and U.S.–centric vendors that grew up as national or regional champions. They now must stave off hungry, Asia-based newcomers such as Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) in far-flung corners of the globe.

From this perspective, today's consolidation represents the old guard closing ranks and rallying around tried-and-trusted markets and technologies. But what if these new mega-vendors have yoked themselves to a falling star by concentrating on the cellular technologies of today?

Aggressive challengers that failed to gain a foothold in 3G, such as Motorola Inc. (NYSE: MOT), Nortel, and Samsung Electronics Co. Ltd. (Korea: SEC) are already looking to pre-position themselves for the next generation of all-IP broadband wireless systems.

— Gabriel Brown, Chief Analyst, Unstrung Insider

The report, Vendor M&A Frenzy: What Happens Next, is available as part of an annual subscription (12 monthly issues) to Unstrung Insider, priced at $1,595. Individual reports are available for $900. To subscribe, please visit:

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
More Blogs from LR Mobile Column
Mobile operators are coming to terms with their supporting role in the mobile apps world
Radio access networks are set for radical change
After a sluggish start, mobile banking will grow exponentially in the US market through 2015
LTE mobile device sales are expected to reach anywhere from 500,000 to 1M units in 2011
China's ranks of 3G subscribers will more than double this year, reaching 40M units
From The Founder
The comms industry is rallying to the cause of open, independent interoperability testing.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Documentaries
The Business Case Challenge for NFV

10|7|15   |   03:47   |   (0) comments

Virtual CPE is one of the early success stories for network functions virtualization, as service providers are finding flexible, programmable CPE solves a lot of logistics problems and reduces their cost. But even here, Masergy Communications faced a business case challenge, says CTO Tim Naramore.
LRTV Interviews
JT Offers Some Gigabit Lessons

10|7|15   |   4:08   |   (0) comments

Barna Kutvolgyi, managing director, Global Consumer, at JT, the incumbent operator on the island of Jersey, talks about how other service providers can learn from his company's gigabit broadband rollout experiences.
LRTV Interviews
AT&T's Chiosi on the Potential of Open Source

10|6|15   |   06:27   |   (0) comments

AT&T Distinguished Network Architect Margaret T. Chiosi talks to Light Reading's Carol Wilson about the potential for open source technology to liberate communications service providers.
LRTV Interviews
Network Security in a Gigabit World

10|6|15   |   05:52   |   (0) comments

Masergy's James Harrison talks about some of the network security and data center issues network operators need to consider as they expand their broadband services portfolios.
LRTV Documentaries
Telefónica: In Search of Virtual Simplicity

10|5|15   |   07:30   |   (0) comments

Francisco-Javier Ramon Salguero, head of Telefónica's NFV initiative, admits virtualization initially means greater complexity, but with the right abstraction layer, it is possible to create a services-driven network architecture. He explains how Telefónica's current trials and initiatives are aimed at doing that, and what his company and other carriers need to ...
LRTV Interviews
Gigabit Europe Takeaways

10|5|15   |   03:47   |   (0) comments

Participants from the inaugural Gigabit Europe event in Munich share their key takeaways from the conference.
Women in Comms Introduction Videos
Intel Urges Women to Take Advantage of Their Seat at the Table

10|5|15   |   4:27   |   (1) comment

Have inclusive and constructive conversations, attach a bigger meaning to your work and get involved in the cause, Intel's Monique Hayward advises women in comms.
LRTV Interviews
BT Updates on Plans

10|2|15   |   03:16   |   (2) comments

Peter Bell, CIO at Openreach, the access network division at UK incumbent BT, provides an update on the operator's trials and how Openreach is planning to deploy the broadband technology in its street cabinets.
Telecom Innovators Video Showcase
Sonus Shakes Up SD-WAN

10|2|15   |   7:22   |   (0) comments

Sonus CTO Kevin Riley sat down with Light Reading to discuss the trajectory of the company, its SDN ambitions and why Sonus is taking a market-disruptive approve to SD-WAN.
LRTV Interviews
CityFibre's Gigabit Vision

10|1|15   |   03:18   |   (1) comment

Mark Collins, director of Strategy & Public Affairs at competitive UK city network operator CityFibre, talks about his company's plans to help build Gigabit Cities.
Telecom Innovators Video Showcase
Automate, Scale & Create With Juniper's vCPE Solution

10|1|15   |   6:34   |   (0) comments

Join Kireeti Kompella, Juniper Networks CTO, and Steve Saunders, Light Reading Founder and CEO, as they discuss Juniper Networks' approach to NFV showcased with a turnkey vCPE solution, which demonstrates how service providers can use automation to rapidly deploy services.
LRTV Interviews
Gigabit Europe: Day 1 Takeaways

9|29|15   |   05:47   |   (5) comments

Light Reading's Ray Le Maistre and Iain Morris sup a beer and discuss some of the key takeaways from the first day of Gigabit Europe 2015.
Upcoming Live Events
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
November 17, 2015, Santa Clara, California
December 1, 2015, The Westin Times Square, New York City
December 2, 2015, The Westin Times Square, New York City
All Upcoming Live Events
Communication service providers realize that an ICT transformation is critical to their long-term survival, but most haven't yet committed to making it happen.
Hot Topics
Verizon's Go90 Is Live – Will Anyone Watch?
Mari Silbey, Senior Editor, Cable/Video, 10/1/2015
Eurobites: Dunroamin'
Paul Rainford, Assistant Editor, Europe, 10/2/2015
M&A Speculation Swirls Around Juniper
Ray Le Maistre, Editor-in-chief, 10/6/2015
Cisco's Chambers Rules Out Political Bid
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/6/2015
AlcaLu Execs Lose Out as Nokia Unveils New Top Team
Iain Morris, News Editor, 10/7/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
With so many new and exciting communications technologies now under development, it's easy to get caught up in the industry's escalating hype cycle. That's why the ...
Last week saw a big day in the 15-year history of Light Reading when Editor-in-Chief Ray Le Maistre and I were invited to interview the Deputy Chairman and Rotating ...
Cats with Phones
Hold My Calls, Indefinitely Click Here