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Tuesday, June 20, 2006

Consolidating telecommunications industry

The telecommunications equipment industry is consolidating with Siemens and Nokia pushing ahead strongly.

Both company announced plans to combine their mobile-network operations to create a joint venture with annual revenue of about US$20 billion. This will put pressure on market leader Ericsson AB.

After their merger, other equipment providers scrample to find suitable partners and Nortel is one player that is hit already.

"In an industry that is consolidating, with customers that are consolidating, you have to find scale," said Inder Singh, an analyst with Prudential Equity in New York.

True - but the question is - what comes after the consolidation phase? Something is always coming behind it, as otherwise, we would have a very consolidated world.

Clearly, this has an impact on Asia - especially on the large scale markets China and India.

China is expected to put up for bid contracts for third-generation wireless networks worth $10 billion to $12 billion until 2009/10. India is another big-item market with deals worth US$5 billion in the pipeline over the next few years as well.

(By Asia Business Consulting)