Partner for Progress to China -...

Partner for Progress to China

Mats H OlssonPresident of Ericsson Greater China

2005-09-72

China telecom market

0

100

200

300

400

500

600

2002 2003 2004 2005F 2006F 2007F 2008F

Mobile Fixed excluding PHS PHS BBAHistorical data: MII statistics Forecast: Ericsson

Subscribers by service category (million)

363.2

Mobile

31.6579.75257.651H2005 (million)

BBAPHSFixed (Excluding PHS)

2005-09-73

Mobile Penetration (%

0

10

20

30

40

50

60

70

80

90

100

Beijing

Shanghai

Guangdong

Zhejiang

Tianjin

Fujian

Jiangsu

Ningxia

Liaoning

Jilin

Heilongjiang

Chongqing

Inner Mongolia

Xinjiang

Shanxi

Hebei

Qinghai

Shandong

Shan'xi

Hainan

Hubai

Guangxi

Yunnan

Sichuan

Jiangxi

Hunan

Henan

Tibet

Anhui

Gansu

Guizhou

Mobile penetration

Nationwide=28%~world average; Major cities>80%=developed markets; 10 provinces<20%

28%

MII data, 2005-06

2005-09-74

Market trends in China 1/2A continuous long-term growth market

Strong mobile subscription growth (adding ~5 Million per month) and traffic growth to continueMobile non-voice services now @~15% of operator revenue, growing @~70% per year– Active GPRS users>29 million, and CDMA 1X users>6 million

Broadband access reaching mass market (adding ~1 million per month)

2005-09-75

Market trends in China 2/2A continuous long-term growth market

Other key emerging trends– Convergence/Triple play – Operator business model transformation – 3G– Internationalization of Chinese operators:

China’s influence increasing on the world stagePartnering with global operators

2005-09-76

1980

assembly 1992

19972002

China : More than just a market

import1988

Local production

with sourcing

R&D

Global sourcing & supply from

China

2005-09-77

Ericsson in China: milestones

1892

Digital switch 1985

Ericsson delivered China's first public live HSUPA demo over commercial WCDMA systems in Guangzhou, China

2005

Demonstrates the world’s first live HSDPA over commercial WCDMA system in Beijing

2004

China’s first mobile phone call over WCDMA trial system

2001

China’s first WCDMA Evaluation System test and reporting accomplished

2000

The industry’s first open lab for mobile multi-media communications in Zhongguancun

1999

Awarded the first company-wide ISO 9001 certification1996

An international AXE exchange installed in Shanghai1990

First mobile phone systems in operation in Guangdong and Qinhuangdao

1987

First digital exchange in China ordered by Beijing1981

First two crossbar exchanges delivered to China1961

First automatic exchange in service in Shanghai1924

First Ericsson manual switchboard in service1900

2005-09-78

Ericsson in Greater China: our leading market position 1/2

>35% GSM/GPRS market share– The largest mobile supplier to China Mobile– ~15% market share for China Unicom GSM

~15% CDMA market shareA leading supplier in IP Core Router market: > 20% Services

– Leadership position in offering new services to all telecom operators

2005-09-79

Ericsson in Greater China: our leading market position 2/2

Strategic cooperation with China Mobile on all new main technologiesStrategic partner to China Unicom in GSM and CDMA network evolution to 3GStrategic cooperation with China Telecom and China Netcom, especially in new businesses, e.g.

– Close cooperation in preparing for 3G – Development of Service Network for China Telecom

A leading supplier in Hong Kong and Taiwan markets– 2G and 3G commercial networks

2005-09-710

Ericsson in Greater China2004-2005: strategic progress

Successful completion of MII WCDMA and CDMA2000 field trialsOctober 2004, ExpoComm Beijing: The world’s first HSDPA phase1 demonstration based on commercial systemMay 2005, Guangzhou: The first HSDPA ph2 and EUL(HSUPA) demonstration in China, based on commercial WCDMA system. Reached 11 Mbps downlink and 1.75 Mbps uplinkTD-SCDMA

– Strategic alliance agreement with ZTE to deliver TD-SCDMA solutions for China– New R&D Center in Nanjing established for TD-SCDMA – Core network IOT already successfully completed

Technical Milestones

2005-09-711

China Mobile– Participation in HSDPA function tests with fully commercialized system: proven to

be the most cost effective solution– Joint research project on IMS: Ericsson proved in the leading position– Streaming Project: tests fully complied with CMCC specification

China Telecom – One of two: Selected partner by Headquarters for studies and tests on HSDPA– One of three: Selected partner for joint development of Integrated Service

Management Platform (ISMP) and Service Network architecture– One of four: Selected partner by Headquarters for studies and tests on Mobile

Softswitch

Ericsson in Greater China 2004-2005: strategic progress

Strategic Cooperation with Customers

2005-09-712


China Unicom– GSM Mobile Softswitch trial started; Ericsson solution also

supports 3G – Only vendor providing FLP trial, boosting GSM capacity

China Netcom– Preferred partner for IMS commercial trials– Preferred supplier in IPv6 network for nation-wide coverage


2005-09-713


Hong Kong and Taiwan:– Sole supplier for SmarTone-Vodafone WCDMA and Peoples

EDGE networks, lead supplier for Far EasTone WCDMA(all in commercial service)

– Industry’s first 2G/3G handset IOT lab in Asia, set up in Taiwan

Ericsson Mobile Platform(EMP) business:– New WCDMA terminal platform contract with Arima


2005-09-714


New R&D Centers in Guangzhou (Service Layer), Nanjing (TD-SCDMA), Qingdao (Broadband Access)

Now 10 R&D centers, number of R&D engineers growing @>50%

WCDMA, GSM, CDMA base stations, core networks, service networks, IMS applications… developed and delivered for global and local markets

Rapid Expansion of Local R&D Capabilities

2005-09-715


Now fourth supply base in China: a new manufacturing venture in Hangzhou, Zhejiang Province

Strengthening Local Supply

2005-09-716

We are fully prepared for the future

113 years’ experience in ChinaContributed many milestones to the development of China’s telecom industryLong-term committed and powerful establishment, ready for future challengesDeeply embedded in China’s telecom industry with strong supply and R&D capabilitiesProven good corporate citizen

2005-09-717

Organizational structure

Regions & Markets

Branches & Rep. Offices

Joint Ventures

2005-09-718

Supply capabilities

Chongqing: transmission supply

Hangzhou: cable supply

Shanghai: power module supply

NanjingShanghaiChongqing

Amphenol上海汉欣电缆

江苏凯凯

常州八一电缆厂

南京熊猫

河南华信电子

Nanjing: supply hubHangzhou

2005-09-719

25% of Ericsson GreaterChina staff work in R&D

R&D capabilities

R&D HQ Systems Technology

Radio Network

BBA

TD-SCDMA Power ModuleService LayerCore Network

Service network

Radio technology

Mobile Internet applications

2005-09-720

Services capabilities

Field support offices in35 locations

1100 in-house field engineers+ 4000 engineers from partners

2005-09-721

Looking forward: Chinese telecom industry in transformation

Operators’ business model transformation– From telecom service provider to integrated information service

provider

Technology (rapid) shift– CS to IP– 3G and fixed Broadband access to boost bandwidth and capacity

Services & Contents evolution– Voice centric to multi-services (triple play/mobile triple play)

2005-09-722

Going forward: Ericsson Greater China

We support operators’ business model transformation with:

– User e2e: Consumer/Enterprise Lab with user understanding, Ericsson develops and facilitates applications and contents, EMP and Sony Ericsson

– System e2e: leadership in Service Layer, Radio/Core network, implement same feature across all the network layers and nodes simultaneously

We support operators’ technology shiftWe will support Service & Content evolution

2005-09-723


We support operators’ business model transformationWe support operators’ technology shift with:

– Global leading technology+fast expanding local capabilities: WCDMA/HSDPA, Converged Core/IMS…

– We have strong and long term cooperation with almost all global leading operators across the regions: Europe, USA/North America, APAC. Sharing global experiences with our local operator partners

We will support the Service & Content evolution

2005-09-724


We support operators’ business model transformationWe support operators’ technology shiftWe will support Service & Content evolution with:

– Service Layer & Systems Integration, Ericsson Mobility World and partnership

– Leading experiences in new applications: Mobile TV, Mobile Broadband, Mobile Enterprises solution, and broadband applications

2005-09-725

Investments in China2006 - 2010

Investment: USD 1 billion– Manufacturing expansion– R&D expansion– Service capacity expansion

Significant local purchasing

Supply Hub, R&D Cornerstone, Regional Hub for Services

2005-09-726

Hand-in-hand with China

Responsible operationsGood corporate citizenSustainable development

Good Corporate Citizen in China

2001 2001~2004 2003 2005

2005-09-727

Partner for Progress to China -...

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