Economy splits telcos, hardware makers

By Niclas Mika

BARCELONA (Reuters) - Mobile phone operators appeared unworried by the specter of a slowdown in the world economy at the wireless industry's leading trade show this week, even as some hardware makers signaled concern.

From Australia's leading operator Telstra (TLS.AX) to FranceTelecom's (FTE.PA) mobile business Orange, carriers said phones remained a high priority for consumers, helping shield telecoms companies from a slowdown.

"I think we still are defensive in a lot of ways ... The one thing you always will want to do is to be in touch, talk to your family, communicate," Telstra Chief Executive Sol Trujillo told Reuters at the Mobile World Congress in Barcelona.

Expanded services beyond simple voice calls and text messages offer further upside, he said.

"The services we are providing now are still of high value. Even though the economy may be bad, would you still share photos with your mother, father, brother and sister? Would you send them by MMS? My bet is that you still will," he said. MMS is a text message with a picture or video attached to it.

"Will you take 18 versus 12 (mobile TV) channels, or 33 channels instead of five? That one may be a little bit different."

But while revenues of telecoms operators may hold up, their capital spending may not.

China's Huawei Technologies HWT.UL said it had seen operators becoming nervous about a possible slowdown, which could lead to slower roll-outs of new, advanced mobile telecoms networks.

"They're nervous, but we have not seen them pull back capital expenditure," Ronald Raffensperger, head of core network marketing at Huawei told Reuters.

DON'T FREAK OUT

Cisco Systems Inc (CSCO.O) Chief Executive John Chambers last week sent shares tumbling by saying U.S. and European companies were the most cautious he had seen in years, resulting in a slowdown in network equipment demand.

But Chambers said at a news conference in Barcelona this week that the slowdown appeared to be short-lived.

"I hope to be here in three months saying I was wrong and it wasn't much," he said. Chambers is typically among the most upbeat technology executives on the global economy.

Chipmaker Infineon (IFXGn.DE) said it could not predict how weak its mobile business will turn out to be this quarter and therefore could not promise the unit would be profitable for the fiscal year to end-September.

Greg Delagi, the head of Texas Instruments wireless chip business, was more sanguine.