Ericsson sees network growth fuelled by mobile surfers

STOCKHOLM (AFP) – Troubled telecom equipment maker Ericsson said Thursday it was confident about prospects this year as more operators boost network capacity to meet growing demand for video streaming services such as YouTube.

The Swedish company, which said in November it plans to axe 1,550 jobs, announced a 53 per cent fall in annual net profit for 2012 as it was hit by a charge for joint venture ST-Ericsson.

But chief executive Hans Vestberg said the group would benefit from projects by telecom operators increasing the capacity of their networks in the second half of this year.

“While the macroeconomic and political uncertainty continues in certain regions the longterm fundamentals in the industry remain attractive and we are well positioned,” he said in a statement.

Telecom operators around the world are struggling to keep up with customers’ growing demand for data-heavy services such as YouTube, Netflix and online gaming apps on tablets and smartphones.

Ericsson itself said in November that the amount of data used by mobile devices had doubled over the past year, boosted by growth in video streaming services.

The trend poses a conundrum for operators, since upgrading networks is expensive and consumers have gotten used to cheap mobile surfing deals.

However, for wireless equipment makers like Ericsson and Nokia Siemens Networks the need for upgrades could signal a turnaround in a sector where spending has been suffering amid economic uncertainty.

“The operators have to do this sooner or later,” said Erik Paulsson, an analyst at investment bank Pareto Oehman.

“We had expected these projects to increase network capacity, but now it’s been confirmed by the company, which is very positive,” he added.