Shrinking of mobile gear market slows in Q3: Dell'Oro

BARCELONA (Reuters) - The mobile telecom equipment market continued to shrink in the third quarter, research firm Dell’Oro said on Friday, casting further doubt on industry forecasts of flat to slight growth in the market in 2010.

The wireless telecommunications gear market has contracted since last year as operators cut spending during the recession and aggressive Chinese vendors drove down prices.

Of top vendors, Nokia Siemens has forecast the market, including fixed-line sales, to be flat in 2010, while Alcatel-Lucent has forecast 0 percent to 5 percent market growth.

The top wireless gear makers returned to sales growth in the quarter, but the market still fell 5 percent from a year ago, compared with 14 percent and 17 percent contractions earlier this year, the researcher said.

Dell’Oro analyst Stefan Pongratz said demand for new network technologies, which enable faster data transfer, was at a very strong level in the United States and Asia due to a surge in data traffic, but this did not not outweigh falling demand for older network gear.

“Chinese operators started spending again, driven primarily by subscriber growth. The security restraints that impacted Q2 were removed and we saw 2G pickup in India,” Pongratz said.

“Component shortages were not as extensive as in Q2 but continued to affect vendors’ abilities to meet demand.”

Market leader Ericsson saw its share of the market rising slightly from a previous quarter to 33.7 percent, while Nokia Siemens Networks -- a joint venture of Nokia and Siemens -- lost No. 2 position to China’s Huawei.

Nokia Siemens’ market share slipped to 19.8 percent, while Huawei was able to hold on to its 20.6 percent stake of the market, Dell’Oro said in its quarterly market review.

Fourth-largest player Alcatel-Lucent saw its market share rising to 16.2 percent in the quarter.

On Thursday the Franco-American vendor said it has access to China’s massive credit facilities used to boost the domestic telecom gear industry, a factor that could boost its position in global markets.

Editing by Gary Hill