At a time when telecom equipment makers are seeing a slowdown in the pace of 5G network deployment in markets like the US, Ericsson said it is difficult to predict the same for the Indian market, given the kind of data consumption the country is witnessing.
“That one (5G gear inventory buildup in India, similar to the US) is always difficult to predict, but in general, if you take a period of four or five years, then you will see the same pattern, and data traffic will continue to increase,” Nunzio Mirtillo, senior vice president and head of market area South East Asia, Oceania & India, told FE in an interaction.
“We have explained that there was an inventory build up in the US, but the data traffic is increasing in the US as well. The investments in (5G network rollout) in the US will come back as well,” Mirtillo said, adding that every market operates differently.
Comments from Mirtillo assume significance as the company reported an overall weak earnings performance in the July-September quarter. However, in India, it witnessed nearly a fourfold increase in sales year-on-year (y-o-y). Ericsson’s India sales in the quarter rose to 9.6 billion Swedish crowns ($880 million) from 2.7 billion Swedish crowns ($248 million), according to the company’s earnings.
The reason for the strong growth in India can be attributed to sales of telecom equipment due to the continued deployment of the 5G network by Airtel and Jio. In other markets like the US, telecom operators have lowered the pace of 5G network deployment and continue to maintain higher inventory of network equipment, which has affected Ericsson’s sales in these regions.
According to Ericsson, in India, the average data consumption is 26 GB per month and that will go up to 62 GB in the next four years, based on the increase in smartphone penetration.
“So, you have a multiple increase in the data consumption demand and in order to cope with that, you need to continue to invest in mobile networks,” Mirtillo said.
At India Mobile Congress on October 28, Ericsson also announced setting up a 6G research and development centre in Chennai. The company said it is looking to partner with other premier engineering institutes in India for 6G-related research.
“This R&D centre in India is a small unit, which will become bigger. We only have three in the world. One in Sweden, second in the US and the third one in India,” Mirtillo said, adding that research and development (R&D) in India is a critical part of Ericsson.