Anders Lindblad is the president and CEO of Ericsson Middle East. Executive sat with him to discuss telecoms in the region.
Why are your clients choosing Ericsson over Huawei? Huawei is working very hard.
Overall I would say we are already in the undisputed lead in the telecom industry and that’s of course a privileged situation to be in. Of course when you are a market leader, I think, that comes with some responsibility, if you want to stay a market leader. And that means that you have to invest in research and development. You have to invest in getting the best people. [This long-term stratgey is] not for Ericsson, it’s for the society, for other businesses. Comparative advantage is all about who has more information about the consumers.
You are providing and also assisting the operator at managing their data.
The consumer data is the operator’s. It’s not ours. So of course what we can do is to extract some behaviors etc., which we do with the operators to look at trends and how consumers behave. But that’s what we do — not directly — by utilizing the data from the operators. So I think when it comes to the basket of the consumers, it’s more our customers who are in the forefront in making sure that we can utilize that kind of information and aggregate that in a way so that it becomes appealing to the consumers.
Are we going to see operators outsourcing consumer trends or this decoding of the data that they have? Is this a service you’re going to provide?
We're practically starting to see two extremes of operator types. For the last 120 years every operator did the same thing. That is changing since the value chain here is maturing — which means that to create the same revenues and profits or defend their position, operators need to start to compete with other value chains. When they do that, it becomes less relevant for them to operate a network and that’s where we feel we have a space to fit into. Some operators say, “I’m an operator. I don’t want to complicate my business problems. I want to stay, to own my network and to operate my network.” They don’t outsource, typically, to us. So I think that in the end, when the operator decides to climb the value chain, we have an opportunity to fall off. If they don’t, they’ll continue to compete.
Have you ever taken a project at a loss?
That’s a decision you have to take, especially when you’re expanding. I mean the classical one where you expand with your existing customers with new solutions, or you take your solutions to new customers. When you do that, you’re competing at a green field and you have to think like a green field. You have to invest six months, twelve months to be able to get the benefit long-term. I never take a bad deal that is a bad deal over a very, very long period. That, we try to avoid.
How much do management services account for your balance sheet or your turnover?
I would say that we are around 15 percent of our revenues. We reported now the yearly revenue of 2012 was $15 billion. And on that revenue base roughly 15 percent or 13 percent were management services. That has gone from a single digit percentage — a low single digit percentage — to actually become a relevant two-digit number.
Knowing the value of intelligence that could be obtained through companies like Ericsson or the operators themselves, how worried should we be? You managed Israel…
We put the highest standards on technical state-of-the-art technology when it comes to creating the security infrastructure as we possibly can. I think that our software and the way we treat data in our technology solution is extremely rich. That is a distinction of course between what we do and then how people sometimes use our equipment. They are the regulators. So I think that, I cannot think of any country now that doesn’t have a very strong opinion on how they actually managed that, and there is regulation in each country. And we try to of course make sure that we do not sell equipment that we believe can be of risk when it comes to these kinds of things. In the end, if somebody wants to do something bad with your technologies, they can always do that. But the positive, the technology for growth really outweighs the risks.