02/18/2008


Performance of suppliers in 2007

 

The total net revenue of the 5 biggest Telecom suppliers in the world had a little increase in 2007: the total was US$ 199 billions against US$ 205 billions in 2006.

 

Nokia consolidated its leadership with the incorporation of the segment of Siemens's telecom networks. Its net income in 2007 was close to the sum of the income received by the two companies separately in 2006. Nokia-Siemens Networks showed a net revenue of $ 21 billion (including the results of 1Q07 of Siemens). The operating margin of Nokia in 2007 was 15.6%, despite the negative result of Nokia Siemens presented operating margin of -9.8%.

 

Note: Revenue of the 4 quarters of the year

 

The Cisco maintained its growth trajectory in 2007 surpassing Ericsson and Motorola. These last two companies decrease its revenue in 2007.

 

Motorola had problems with its cell phones division and lost its second place in market share for Samsung, having in 2007, in this segment, 49% lower revenue compared to 2006. Motorola showed damage of $ 878 million in 2007, and that the loss of the division of cell phones was $ 1.2 billion. In a showdown Motorola swapped its CEO and examines the ability to sell this division.

 

Ericsson, which focuses its expertise in cellular networking, , in 2007 felt the effect of a slower growth in the deployment of networks, in mature markets that have already established their 3G networks and also in emerging where these networks still didn't start to work. The operating margin of Ericsson fell from 20.2% in 2006 to 16.3% in 2007.

 

The revenue of Alcatel-Lucent remained stable in 2007, but the company had loss of 442 million euros.

 

Among other suppliers, Nec and Nortel maintained its revenues stable at US$ 17 billion and US$ 10 billion respectively. Huawei continues to grow and surpassed Nortel with net revenue of US$12 billion in 2007 (predictted by Teleco).

 

The problems faced by Motorola is a good example of the volatility of this market and the importance of making the right choices in investments in research and development. These companies are already engaged in the battle for the next generation of technologies such as LTE (Long Term Evolution). The LTE desponta how technology to be adopted by most mobile carriers from 2010. The Alcatel-Lucent and Nec, for example, announced the formation of a joint venture to develop LTE.

 

Suppliers in Brazil

 

The telecom suppliers gained R$ 17.5 billions in Brazil in 2007 with 4.5% growth compared to 2006 (more details).

 

The brazilian exportations presented decrease of 23% because of a reduction in the cell phones exportation which decreased from 32 million devices in 2006 to 22 million in 2007. Teleco predicted that in 2007 were produced 67 million cell phones in Brazil, 2% more than 2006 (more details).

 

Nokia leads in cell phones and Cisco in IP networks. Ericsson, Nokia Siemens and Huawei got most part of the contracts to 3G networks.

 

Operators chose the following vendros to 3G networks in Brazil:

 

Operator Core Access Equipaments
Vivo Ericsson Ericsson and Huawei
Tim Ericsson Ericsson,
Nokia Siemens and Huawei
Claro Ericsson e Nokia-Siemens Ericsson,
Nokia Siemens and Huawei
Oi Nokia-Siemens Nokia Siemens and Huawei
BrT Ericsson Ericsson and ZTE
Telemig Ericsson Ericsson
CTBC Huawei Huawei
Sercomtel Ericsson Ericsson

 

Alcatel-Lucent is leader in ADSL and in Jan/08 was chosen by Brasil Telecom (BrT) as exclusive supplier of maintenace services to its network.

 

According to the situation you could ask:

  • Will the revenue of telecom global suppliers increase in 2008 in the world ? And in Brazil?
  • Will the process of consolidation of the telecom global suppliers continue in 2007? What could happen? Motorola and Nortel?
  • Will Motorola sell its cell phones division?
  • Would be possible to imagine joint venture of Motorola with Cisco?

 

 

Commentaries

 

 

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