A day of second quarter results – but what did they tell us about the European wireless market?
First, Ericsson. Ericsson reported some decent results overall, but in Europe the picture was less rosy. In Western and Central Europe sales decreased by 2% year-over-year and 10% sequentially. The company said that pressure on overall mobile service revenues in the region is leading to network sharing and outsourcing initiatives. Despite that, demand for mobile broadband continues to be strong, offering an upside within the overall decline.
Network modernisation, including deployment of multi-standard radio, has started and rollout will accelerate during the second half of 2011. The sting in the tale there is that Ericsson also reported that low margin network modernisation projects in Europe negatively impacted the overall margins of its business. That said, it added that these types of project in Europe will “accelerate” during the second half of 2011. Average project duration is expected to be 18-24 months.
There was another sign that belts are being tightened in Europe too: although the vendor added 4,500 staff to its services unit, and 1,000 through acquisitions, most of these were in Brazil, India and China. In countries in Western Europe Ericsson was laying off staff.
However, away from Western Europe, Russia was listed as showing strong growth, both year on year and sequentially.
Another Nordic company, Telenor, also hailed some decent news from Europe. It said that although Asia drove most of its eight million subscriber additions for the quarter, its customer base in Norway had started growing again. Data revenues in Norway were growing, compensating in part for price pressure on voice.
The company said that in the Nordics, service offerings launched this year have had positive effects. A statement said, “All three operations are now attracting new customers.” Certainly the operator is going to look for some quick returns, having invested more than one billion Norwegian Kroner in future technologies, in Norway alone, in the quarter.
Then we had Nokia, completing the Norway – Sweden – Finland trinity. No doubt you will have read by now of the overall nature of Nokia’s results. With Symbian being shunted aside, and MeeGo also in a holding pattern with its N9 phone being well received but given no channel to market, the company essentially had nothing new to sell. In Europe, unit sales were down 30% year on year and 21% quarter on quarter. In total, the company sold just over 18 million devices (all devices) across Europe in the quarter.
Its networks unit, NSN, showed better results though. In Europe it saw net sales decline by just 1% year on year, and rise 12% quarter on quarter. On a global basis sales were up 20%, although this included results of the Motorola acquisition. Excluding the Moto sales, NSN equipment sales would have risen 8% quarter on quarter. As it was, with Moto included, sales rose 15% quarter on quarter. Moto’s network sales would have had limited impact on NSN’s European sales, one suspects.