Ericsson`s growth and market share soars on he continent`s 3G investment wave JAN EMBRO says he prefers to keep a low profile, seemingly both for himself and his company. A mission impossible, given that he heads up the local contingent of the world`s - and the continent`s - largest telecoms infrastructure builder, Ericsson.

As MD of Ericsson South Africa and president of the sub-Saharan Africa market unit, Embro oversees a multibillion-rand operation with a "rapidly growing" team of nearly 1 500 permanent staff (excluding hundreds more subcontractors and consultants) building mobile networks and rolling out accompanying services for 90 customers in 43 countries.

"Within a year we will have offices in half of them," he notes. "Our intention is to increase our physical presence to meet the business success we have been having."

Ericsson operates in Africa from four hubs: the principal hub being South Africa, and then Senegal, Nigeria and Kenya.

And it does business from trio of business units - the product of a global restructure in late 2006 - business networks, global services and multimedia.

"We`re doing exceptionally well in sub-Saharan Africa. Our market share is higher here than it is globally, as is our growth - up to 50% annually in the mobile space, as compared to around 40% globally."

And Ericsson does business with the who`s who of mobile operators in Africa - MTN; Celtel, or Zain as it`s known after its recent rebranding; Orange (France Telecom); and is pursuing Vodacom and Vodafone.

"MTN is our biggest customer in South Africa and on the continent - they`re operating in 22 countries now. Clearly, they`re a very successful operator and we have a good relationship with them. We see it as a good partnership from our side."

As is to be expected, Embro pays close attention to the convergence of suppliers and operators in the African telecoms market. He admits though that he`s a bit surprised that many global players have waited until now to pounce on Africa, so to speak. "I felt, even seven years ago when I first arrived in Africa, that clearly this was a very good market, and it has been a very good market for us as a vendor, and definitely for the MTNs and Zains of this world - they have done well."

"Therefore, we`re constantly evaluating business, nothing is too small or uninteresting," because you never know when a bigger player may snap up that smaller player, he points out. And, depending on who`s buying who, the whole competitive landscape could change dramatically with one deal.

BIG DEALS

Ericsson`s most noteworthy projects at the moment are two greenfield network deployments, both in Kenya, reveals Pieter van der Westhuizen, vice-president: Networks & Sales Support for the sub-Saharan Africa market unit.

"What makes these projects significantly larger than the standard telecoms projects is that they`re turnkey, so we`re building all the infrastructure that the operator needs, including the civil works and the sites, so it`s beyond the traditional telecoms infrastructure deployment," he explains.

Other projects worth a mention are network expansion projects for MTN in South Africa, and with MTN and Zain in Nigeria, and the roll-out of a new network in Ghana.

Van der Westhuizen points out that a potential area of growth for Ericsson is in the roll-out of optical fibre in Africa. "We have, only over the last year, built up a fibre cable unit," he admits. And already the company is busy with the deployment of a 1 500-km-long submarine optical fibre cable, as part of the Adonis project, along the coast of Angola, which will link up with the SAT3 undersea cable with Namibia in the south and the Democratic Republic of the Congo in the north.

Microwave transmission is yet another opportunity for Ericsson on the continent. "Transmission is a bottleneck in most countries in Africa, so even though the growth is there on the networks, we are stumbling on the transmission, especially when it comes to data, because there`s a lot more traffic to push through. We`re currently working on the biggest broadband microwave backbone project for Ericsson right here in Africa, in Nigeria," reveals Van der Westhuizen.

There are a lot of transmission developments on the continent, driven by wireless broadband, and also the submarine cables, he adds.

These developments just underpin the fact that sub-Saharan Africa is one of Ericsson`s biggest markets, points out Embro.

FRESH FOCUS

Back in South Africa, broadening its business offering is the goal of the Swedish company. "We`ve been very mobile system and microwave transmission focused, but we`d like to broaden that to more fixed, more multimedia, more fibre-type business," says Embro. "We`re also bidding for some interesting work around the provision of TV infrastructure. Ericsson recently acquired Tandberg Television, the supplier of TV broadcasting systems," says Van der Westhuizen.

Embro notes that this mirror`s Ericsson`s global focus in the last year, which has been to broaden its product portfolio, to change from a predominantly mobile system and services supplier to a supplier of broadband infrastructure and multimedia systems. This against the backdrop of several 2007 acquisitions, including Redback Networks, a multi-service edge routing technology vendor; billing software firm LHS; service delivery platforms provider Drutt Corp., and fibre access company Entrisphere.

"So, a big part of our work now is to leverage off these acquisitions and introduce those portfolios to South Africa. With Redback in our back pocket, this year alone we`ve signed roughly ten IP backbone deals, so we are building around ten IP backbone networks [in Africa].

"What is interesting is that you don`t expect sub-Saharan Africa to be at the forefront of technology, because it`s always been a couple of years behind, but technology roll-out has been happening more or less first here. And there`s not so much IP infrastructure in Africa, so that deployment is happening now. So we have all these global experts sitting around the world, but when there`s a launch, then they often end up here in Africa, in Nigeria or somewhere," remarks Van der Westhuizen.

THE GSM FACTOR

There`s a reason why the telecoms market is doing well, and why Ericsson is doing well, and that is because GSM penetration is fairly low in Africa, he elaborates. "We think its not much higher than 25%, so it`s still three quarters of people to get GSM, and there is very linear growth in GSM subscribers coming on. We are focusing on making it more affordable for operators to bring those subscribers onto their networks, so we have a programme around GSM," he says.

The other big trend is around broadband. "We see an enormous momentum building up around broadband. If you look at how many African countries have 3G licensing to date, and those planning to be licensed in the next 12 months, there`s enormous momentum building up around this for wide-band CDMA and HSPA, and this is creating a wave of investment, and an enormous demand build-up for internet services in African countries. This has been tough to meet in an uncoordinated way, and the operators have seen this, and that`s why you now see all these submarine cables going in to satisfy this kind of demand. It`s very good for us, with our market share, to go after this 3G and HSPA business.

"We think most of the 3G licensing is happening in 2008, 2009 and 2010. Then it will be isolated licensing after that. By 2010 we think most countries will be licensed from a 3G perspective, and then it`s the deployment, and of course it starts in urban areas where people have computers, but going from there. This is a ten-year-plus wave of investment for us," enthuses Van der Westhuizen.

RISING TO THE SKILLS CHALLENGE

As for the challenges Ericsson faces, the competition isn`t one of them. "Africa doesn`t change global competition. All the big telecoms suppliers, our competition elsewhere in the world, are in Africa already," says Embro.

"The skills shortage is a big problem for our customers, and even bigger for us. What it means then is that they put greater demands on us on the part we have to play in their operations. So, we are running certain networks already in Africa, and they transfer the demand for skills to us, you could say, so that is why we have our headcount growing 50% in 12 months, and us also bringing in a number of people from our global pool to help localise expertise and competence. In some countries it really is a big problem. There are hubs where you can find people - South Africa, Kenya, Senegal and Nigeria, but we`re fortunate to have access to a global skills pool." Ericsson is getting innovative to overcome environmental challenges. Together with a - client in Nigeria it has launched a power system which cuts diesel consumption by the diesel generators at off-grid base stations by 50%. "To cut 50% of diesel usage is a big thing for operational costs and the environment," notes Embro.

Van der Westhuizen also indicates that they`ve been running solar-panel trials with customers in remote regions and "already costs are coming down, and efficiency is improving," he concludes.