Ericsson head sees conditions improving for telecoms

Ericsson chief executive Carl-Henric Svanberg said Wednesday price pressure on mobile telephone networks might start to ease soon, financial news agency Direkt reported.

“A few years ago there were players who were desperate to win contracts, and the Chinese players had the ambition to expand internationally and therefore put in low bids. Now there is reason to believe that that situation may ease,” Svanberg said on the sidelines of Ericsson’s annual general meeting.

“The Chinese were of course very interested in entering the market in various countries, and then it didn’t matter whether they made money from the contracts or not. Now they have a presence and are not as eager anymore,” he added.

Svanberg also said he saw no effect from the global credit turmoil on the telecoms industry for the time being.

Ericsson, the world leader in mobile telephone networks, and its rivals are suffering from a slowing market that the Swedish group expects to continue through 2008.

Investments in mobile network expansions and upgrades, which bring in more money than new rollouts, have been slowing down, and competition from Asia, notably China’s Huawei, has intensified.

In 2007, Ericsson posted a 17 percent drop in net profit to 21.8 billion kronor ($3.4 billion), while its market capitalization was halved.

On Wednesday, the Ericsson share price was up 2.22 percent to 12.42 kronor on the Stockholm stock exchange, with the market up by 0.18 percent overall.

Ericsson is scheduled to present its first quarter earnings report on April 25.