Ericsson India has come a long way since its foray into the country in 1996. Over the years, it has strengthened its position across the hardware, software and services verticals, and catered to a whole gamut of stakeholders across the telecom and IT value chains in the country. The company has not only helped operators make their networks ready for the deployment of next-generation technologies, but also helped them in upgrading their operations support systems (OSS) and business support systems (BSS) to deliver quality experience to end-users.

India is one of the top three markets for the vendors globally, with the country registering a steady growth in net sales. During the first quarter (January-March) of 2015, net sales from the Indian region stood at SEK 3.5 billion, recording a growth of more than 100 per cent over the SEK 1.7 billion registered in the corresponding period in 2014. Moreover, India’s share in Ericsson’s total net sales has been growing consistently. During the quarter ended March 2015, it accounted for 7 per cent of its global net sales, a significant increase from the 4 per cent recorded during the same period of the previous year.

Data and networks continue to be the key growth drivers for Ericsson in India, accounting for 60 per cent of the region’s sales during the first quarter of 2015. In fact, the company is very optimistic about data being the next growth frontier in the Indian telecom sector. According to the recently released Ericsson Mobility Report, the total number of mobile subscriptions in India is expected to increase to around 1.4 billion by 2020, 3G subscriptions are expected to grow from over 120 million in 2014 to around 620 million by 2020, and smartphone subscriptions are likely to grow from 130 million to 750 million during the same period. Therefore, it becomes logical for Ericsson to shift from voice to new businesses that have data services at their core. Currently, Ericsson is investing in verticals like IP, network and transport, OSS/BSS, and TV and media management. It has set a target of achieving about 10 per cent growth in these new businesses on a yearly basis.

Even globally, Ericsson is increasingly looking to expand its business portfolio by tapping the potential of organisations outside its traditional user base and comprising pure-play operators. On account of the growing convergence in telecom, IT and media, Ericsson is now exploring business opportunities offered by new segments such as mobile phone manufacturing (through intellectual property rights), broadcasting, cloud solutions, transport, public safety and utilities. It plans to double the share of sales generated from non-telecom companies from 10 per cent in 2013 to 20-25 per cent by 2020. The company is optimistic about achieving this target as it is possible to reuse the architecture and platforms created for the core business for other non-core businesses too.

A look at Ericsson India’s key focus areas and future growth strategy…

Leading in the OSS/BSS space

Ericsson India is emerging as a leading player in the country’s OSS/BSS market with its key strengths in areas such as service fulfilment, assurance, network optimisation and real-time charging. It is currently working with the two telecom majors, Vodafone India and Bharti Airtel, in this domain. It is helping Bharti Airtel in monetising data through mobile convergence. Ericsson India has a workforce of 1,000 employees, who design and develop BSS solutions for local as well as global markets. Further, with Ericsson’s expertise in OSS/BSS, such solutions can be easily combined with trends in software-defined networking, network functions virtualisation and 5G in the future for monetisation.

Gaining from digitisation and content delivery

The digitisation of the cable TV market has opened new revenue streams for Ericsson in India. Cable operators are now looking for partners to manage billing systems and control mechanisms, and for creating an internet-based backbone for their delivery networks. Ericsson’s offerings in the TV and media space include OSS/ BSS, prime integration services, over-the-top platforms, middleware and digital rights management as well as cloud DVR. Ericsson has recently won orders from Tata Sky and Sun TV for the deployment of its AVP 4000 video compression platform, which is set to enhance customers’ TV viewing experience. Ericsson’s new technology will power all 33 channels of Sun TV in India. Meanwhile, Tata Sky has  upgraded its entire direct-to-home (DTH) platform to Ericsson’s new system. This will allow Tata Sky to expand the bouquet of channels that it offers to end-subscribers while maintaining a high quality of viewing experience. Besides Sun TV and Tata Sky, the company is working with Bharti Airtel and Dish TV. It also serves content providers like Star TV.

Ericsson currently holds 10 per cent market share in the Indian media and TV broadcast space that is estimated at $400 million. According to the company, four out of seven DTH operators use its technology for their set-top boxes and video services. The company foresees strong growth in the segment and expects to capture 15 per cent of this market by 2017.

Contribution to the Digital India and Smart Cities programmes

In early June 2015, Ericsson signed a partnership agreement with Sterlite Technologies to implement solutions for smart sustainable cities as a part of the Digital India programme. These solutions will be deployed in the areas of communications (Wi-Fi networks and fibre deployment), public safety (video situational awareness solutions and emergency response), intelligent transport (traffic management and fleet management) and smart grids (smart grid communications and smart metering).

Further, in a bid to tap opportunities arising from the government’s Smart Cities initiative, Ericsson is setting up a new division, Society and Industry, to focus on smart city projects. The company is already using many of its sensor-based and analytics technologies to cater to the smart city segment. In the initial phase, this vertical will focus on companies in the energy and utility, transport and automotive, and safety and security industries.

Challenges and the way forward

Given the new business opportunities that the Indian market offers, the road ahead for Ericsson looks very exciting. At the same time, it is likely to face several challenges in the country. Ericsson is yet to receive clearance from the Department of Telecommunications to sell the media gateways that it manufactures at its Jaipur unit. It had applied for clearances in late 2012. The company is also facing a probe, initiated in May 2015 by the Competition Commission of India (CCI), into some of its practices while licensing out its GSM technology to handset makers.

Besides regulatory issues, significant competition exists from other global vendors like Nokia Networks and Alcatel-Lucent, as well as Chinese vendors such as Huawei and ZTE in the mobile network equipment space, which continues to be the mainstay of Ericsson’s business. However, unlike its peers in the market, Ericsson is not very aggressive about joining forces with other companies to ward off competition. It continues to pursue a policy of maintaining a healthy mix of organic and inorganic expansion to drive business. The company has made a few small acquisitions to complement/fill gaps in its existing product offerings as well as to enhance its geographical footprint. In the third quarter of 2014, Ericsson acquired MetraTech to leverage its two software solutions that address the needs of the enterprise market based on the metadata architecture.

Going forward, the company expects to register higher revenues and tap various opportunities that the Indian telecom sector offers. It has announced investments worth $15 million to establish the company’s second unit in India (in Pune), which will give a major push to its exports from India. In addition, the opportunities arising from the Smart Cities and Digital India programmes will ensure that the country continues to be a key market for Ericsson in the near to medium term.