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Cambridge, MA, June 26, 2006 – The recently announced Nokia and Siemens merger would make Nokia Siemens Networks the 3rd largest carrier network infrastructure vendor after Ericsson-Marconi and Alcatel/Lucent with combined sales of $15.8bn euros (US$19.75bn) and a headcount of about 60,000.
“For Nokia, organic growth to reach the level of scale shown by the major players was not feasible because it would take too much time, so acquisition was the solution" notes Sergio Cruz, Research Manager at Pyramid Research.
The carrier network infrastructure industry has been taken to another level of operation in the last year due to the consolidation of Alcatel and Lucent and the performance of Ericsson. These two players are operating around the $20bn euros level and enjoying significant economies of scale. The new Nokia Siemens Networks will have greater purchasing power and with platform commonality, equipment costs could be reduced by 45% according to the new company’s sources, allowing it to compete in this new environment.
Consolidation also extends to the operator level with the top 10 mobile conglomerates controlling 40% of total global subscribers. The operators are increasingly moving their contract to single companies for greater negotiation power, creating a need for vendors to balance this situation by growing themselves.
Cruz concludes, "We expect further consolidation to take place because the ‘operating point’ of the industry has changed. The sale of telecommunications equipment is a game of economies of scale and scope. As operators consolidate their fixed and mobile operations, vendors must increase their size to better negotiate contracts.”
Pyramid Research’s Mobile CAPEX Service
The Mobile CAPEX Service identifies regional and country-level expenditures by technology for radio access, core network and next generation network investment. It forecasts infrastructure CAPEX and units in service for more than 150 operators in 40 countries and analyzes how operator priorities and revenues impact infrastructure spending.
About Pyramid Research
For twenty years, Pyramid Research has helped companies in the converging communications, media and technology industries stay ahead of market trends, understand competitive threats and capitalize on opportunities. We advise the world’s leading vendors, service providers, equipment manufacturers, and the financial community on how to implement best practices, build offensive growth strategies and drive profitability.
Press Contact:
Amalia Vega
Pyramid Research
P: 617.494.1515 ext 231
E: avega@pyr.com
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