In Short:
In 2024, demand for 5G in India slowed down as expected due to rapid expansion last year, leading to a 42% drop in mobile network sales for Ericsson. The company CEO, Borje Ekholm, discussed the need for new 5G use cases like fixed wireless access and industrial applications to drive revenue for telcos. Ericsson is open to working with struggling telcos like Vodafone Idea in India for 5G rollout.
The demand slowdown in India in 2024 was expected as telcos had rapidly rolled out and expanded 5G last year, said Borje Ekholm, chief executive of Swedish telecom gear maker Ericsson. The company Tuesday reported a 42% fall in mobile networks segment sales, dragged by India, South-East Asia and Oceania. Speaking to ET’s Kiran Rathee, Ekholm said 5G is in its early stages and a rebound could be some years away, depending on the development of use cases, especially industrial ones, which will start generating revenue for telcos. He added Vodafone Idea has been under financial stress for a long time and Ericsson is open to working with the telco for 5G.
Insights on Demand Slowdown in India
From a global perspective, we knew that India had an unprecedented pace of build-up last year and it was expected that it would come down this year. So that is perfectly in line with what we expected. The interesting thing is that we see an adoption of 5G happening in India. We’re starting to see new use cases like fixed wireless access being used in India. I am optimistic that the development we’re seeing now happening in India, and other countries, supports that we’re still relatively early in the roll out of 5G. In India, you happen to have the leading digital infrastructure in the world right now, maybe I can compare it with China.
Monetization of 5G and Uptake of Industrial Use Cases
5G was designed for enterprise use cases and for digitizing society. To do that, you need reliable connectivity, low latency, and very high capacity. That’s exactly what 5G gives. What we need is such use cases start to get developed and we’re starting to see that in some factories. In China, there are 10,000 enterprise networks deployed that drive digitalization of companies. Are you seeing some uptake of private networks in India? It is still a relatively limited uptick. We’re starting to see it happening, but it’s still very, very early.
Expectations for Rebound and Collaboration with Vodafone Idea
When do you expect a rebound? It’s tied to the question of use cases. I think for the industry to drive increased investments, we need to see new revenue streams created for the operators and that comes out of new use cases. Fixed wireless access is clearly an early use case, interesting for India, given the relatively limited bandwidth of fiber. But I think that’s a very competitive product. We’re going to see mission-critical quality, connection for police forces, blue-light services, ambulances, etc. That is going to drive new use cases and new revenues. Vodafone Idea is preparing to raise money and they will roll out 5G. What does that mean for the Indian industry and for Ericsson in India? Clearly, Vodafone Idea has been under financial pressure for a very long period of time, so it all depends on how this is going to shape up and how the investment plans will be realized.
Insights on Ericsson’s Manufacturing in India
Can you share some insights on Ericsson’s manufacturing in India. How much of the equipment is utilized locally and exported? So far, given the pace that we had last year, we used most of it locally. How this is going to evolve going forward is the step we are looking at right now. India is an interesting hub for us. We have the biggest workforce in India globally of all countries. We are hoping to rely more on the local ecosystem for our supply as well. But that is going to take some time.
Potential Partnerships with Indian Companies
Are you open to partner with Indian companies in generating IPRs? We also work with and look at different opportunities to move forward. We are going to see how that evolves. I think this can be very interesting in an open RAN setting where there is going to be a need for multiple vendors of different radios.
