BARCELONA Nov 20 Network gear maker Ericsson
said Vodafone's plan to ramp up spending on
its network could prompt other network operators to follow,
making Europe fertile ground for the Swedish company and its
"It would be fantastic if we could get to, let's say, half
of the dynamics that we have experienced in the U.S. market,"
Chief Financial Officer Jan Frykhammar said at the Morgan
Stanley Technology, Media and Telecoms conference.
"(Then) it will be fun to be a vendor and an investor in
Europe. But we are not there yet."
Europe has fallen behind the United States and parts of Asia
in rolling out fast mobile broadband for customers using
smartphones and other devices, but Vodafone's move could mark an
improvement in gear makers' prospects.
Vodafone said earlier this month it would spend 7
billion pounds ($11.3 billion) of the proceeds from the sale of
its stake in Verizon Wireless to increase the speed and coverage
of its networks.
The world's second-largest mobile operator is spending 3
billion pounds in Europe, 1.5 billion in its emerging markets
and the rest on fixed-line assets, enterprise and its retail arm
in what it calls Project Spring.
Vodafone's chief executive said in Barcelona on Wednesday
that he was open to keeping network spending above traditional
levels once its two-year booster programme has ended if it needs
to respond to customer demand and competitors.
"Fundamentally if we have been able to win the right
footprint when we modernise the networks in Europe, especially
then with Vodafone, and we have done that using our
multi-standard radio, then (Project Spring) is good for us,"
Ericsson's Frykhammar said, making the unusual move of
commenting on a specific customer.
He said Vodafone's rivals may react by also ramping up
spending but also cautioned that many European economies were
still suffering, with consumers reluctant to increase spending
on mobile services.
"But fundamentally, the leading operator in Europe deciding
to invest in differentiation by means of quality performance,
that cannot be bad," Frykhammar said.
Ericsson leads the world's network gear makers, followed by
China's Huawei. NSN is also among its
In Ericsson's third quarter results it noted a significant
pickup of business in Europe.
In contrast with Europe, Frykhammar said most of the
superfast mobile broadband coverage roll-outs in the United
States were done.
"Shorter term there is a shift from coverage to capacity in
the U.S. which means the top line is becoming more uncertain. On
the other hand, on the cost side, what we sell, we sell at
higher margin," he said.
But he added there would be many other business
opportunities in the United States in the next couple of years
in areas such as small cells and new architectures.