November 21, 2012 / 11:17 AM / in 5 years

UPDATE 1-Ericsson sees mobile data traffic doubling each year

* Sees mobile data traffic doubling each year until 2018

* Sees 6.6 bln mobile subscriptions by end-2012

* Smartphone subscriptions to hit 3.3 bln in 2018

STOCKHOLM, Nov 21 (Reuters) - Telecom equipment maker Ericsson said it expected mobile data traffic to double every year until 2018, driving new investment in networks.

Sweden’s Ericsson, which reckons more than 40 percent of the world’s mobile traffic passes through its networks, said a surge in smartphone and tablet computer sales has driven a switch in traffic in telecoms networks from mainly voice calls to mostly video and music which take up more capacity.

By the end of this year, there will be around 6.6 billion mobile subscriptions, just shy of one for every person on the planet, Ericsson said in a twice-yearly report.

Subscriptions for data-heavy devices like PCs and smartphones are set to roughly double to around 4 billion by 2018, with smartphone subscriptions alone rising to 3.3 billion from 1.1 billion estimated at the end of this year.

Although data traffic has been surging, clogging up networks, operators continue to find it hard to get customers to pay much extra, squeezing their profits and those of their suppliers just as the global downturn bites.

This has hurt equipment suppliers, already struggling with cut-throat competition and commoditization of network products.

Ericsson has said sales at its networks unit fell 17 percent in the third quarter. It plans to cut around 1,550 staff to bring down costs, and rivals are doing no better.

French-American Alcatel-Lucent posted a second straight quarterly loss in the July-to-September period while China’s ZTE Corp recently slumped to its first quarterly net loss since listing in Hong Kong in 2004.

Nokia Siemens Networks is slashing a quarter of its staff to find 1 billion euros ($1.28 billion) in cost savings by the end of next year.

However, bulls in the equipment industry argue that growing smartphone and tablet sales will force operators to invest in new 4G networks which have higher speeds and more capacity.

Ericsson said it expected rapid growth in 4G networks - what it calls Long Term Evolution (LTE) - which can cope with the increase in data traffic. ($1 = 0.7811 euros) (Reporting by Simon Johnson; Editing by Louise Heavens)

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