Services Briefing 3 November, 2009 London © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 This presentation may contain forward looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read our earnings reports and our most recent annual report for a better understanding of these risks and uncertainties. © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Services Update Stefan Jelvin Director of Strategic Marketing Business Unit Global Services © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Global Services in short 2008 services sales SEK 70.5 b. – Professional Services SEK 49 b. – Network Roll-out SEK 21.5 b. 21% growth in Professional Services 9 months 2009 – Stable margins 350 m subscribers in managed network – 125 m added last 12 months 37,000 Services professionals (in-house) – 175 countries Continued execution on strategy – Gaining market share © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Telecom services market 2008 2006 2007 2008 est. [USD b] Operator internal services spending Current addressable market ~144-148 ~150-154 ~154-158 Managed services Consulting Higher growth Systems integration Education Professional services ~48 ~53-55 ~59-61 Support services Network rollout services ~18 ~19 ~20-22 Network rollout This slide contains forward-looking statements. Actual result may be materially different. © Copyright Telefon AB LM Ericsson 2009. All rights reserved Lower growth Source: Ericsson, April 2008 and Ernst & Young Market Study 2007 2009-11-3 Telecom services market trends Economic downturn bring opportunities – Opex/cost reducing measures very valid – Improving efficiency also in focus Managed services business opportunity continues to grow – Cost and asset optimization - driven in mature markets – Growth and competence - driven in high growth markets Network transformation – From a business, operational, competence and technology perspective – New/more end-user services Operators want more than an equipment vendor – They want a business partner © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Telecom services competitive landscape IS/IT players Products+Services, Only Services, Pure offshore Constellations Independent telecom services providers Telecom equipment vendors Highly fragmented market © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Successful Services strategy Global Services Expand services business Managed Services Systems Integration Consulting Education Customer Support Network Roll-out Networks Grow services in Ericsson mobile, fixed and multimedia solutions Multimedia Expand our business with operators, providing value through services excellence © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Number 1 in Telecom Services Ericsson services sales [SEK b] 80 [SEK b] 250 70 200 60 150 50 100 40 50 0 30 2003 2004 2005 2006 2007 2008 20 10 Ericsson sales, CAGR 2003-2008: 12% 0 Services sales, CAGR 2003-2008: 21% 2003 2004 2005 2006 Professional Services 2007 2008 Rollout services Also in operator perception… Source: Ericsson reports © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Professional Services performance Sales and growth YoY per region 2008 9 months 2009 Western Europe Up 7% Western Europe Up 5% North America Up 15% CEMA Up 18% Latin America Up 16% North America Up 26% CEMA Up 43% Latin America Up 26% Asia Pacific Up 16% Asia Pacific Up 28% 2008: SEK 49 b. 9 months 2009: SEK 39.7 b. A beneficial geographical mix and overall growth © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Ericsson the trusted business partner Operator Prime Integrator Consulting Network rollout Network design Education Managed Services More than 50,000 strong workforce – 175 countries Customer support Managed operation and hosting • +28,000 Services Professional close to customers Systems integration Project Management • +9,000 Services Professionals in global centers Network and technology consulting Business consulting • +15,000 resources from partners Ericsson technology and solutions © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Managed Services Valter D’Avino Vice President and Head of Managed Services Business Unit Global Services © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Key managed services trends Ericsson experience Key deals in all regions Managing multi-vendor, multi-technology networks ~50% of equipment non-Ericsson 24% year-on-year growth first nine months 2009 Managing networks that together serve >350 million subscribers Experience from >300 managed services contracts © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 2009 - Managed Services happens everywhere North America – Breakthrough contract with Sprint, US, fixed and wireless CEMA – First major managed services contract in Africa with Zain, Nigeria – Managed services with with Du, Dubai Western Europe – MBNL, Vodafone UK and Telefónica O2 UK – TeliaSonera Sweden, fixed © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Why Managed Services? Technology migration Change agent Competence need Financial pressure Consumer focus Cost Savings Operators reviewing business models and focus © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Four segments of managed services Operation Shared Solutions Field Maintenance Operational Readiness (Hosting & Managed backhaul) © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Network sharing scenarios Network Sharing Passive Sharing Active Sharing RAN RAN Sharing Sharing Savings Backhaul Backhaul Sharing Sharing Site Site Sharing Sharing Consolidate site and backhaul infrastructure Share new site and backhaul deployment Consolidate RAN Share new RAN deployment Consolidate site infrastructure Share new site build Degree of sharing © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Network sharing scenarios Savings Consolidate site and backhaul infrastructure Share new deployment Consolidate site infrastructure Share new build Consolidate RAN Share new RAN deployment RAN RAN Sharing Sharing Backhaul Backhaul Sharing Sharing Shared operations Site Site Sharing Sharing Shared assets Degree of sharing © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Conclusion Network sharing a clear trend and a growing market Creates opportunities for services Another reason why managed services market continues to grow © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Network Modernization Jan Ögren Vice President Network Roll-Out Business Unit Global Services © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Ericsson network roll-out Mexico 1897 © Copyright Telefon AB LM Ericsson 2009. All rights reserved © Copyright Telefon AB LM Ericsson 2009. All rights reserved Peru 2007 2009-11-3 Ericsson network roll-out Today, so much more... © Copyright Telefon AB LM Ericsson 2009. All rights reserved © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Network modernization drivers Increased consumer demand boosting mobile data traffic – Drives re-design / upgrades of access networks – Requires increased expansion of backhaul capacity Fierce competition among operators – Need for cost efficient networks – Quality of service and attractive service offering New technologies lowers cost but increases complexity – Operators increasingly look for ”one-stop-shop” – Time-to-market and handling project risks are crucial Ericsson in prime position to help operators evolve their networks © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Ericsson network roll-out services The end-to-end approach Project Management Consulting Planning & Design Build Integration Optimization Operations & Support Turnkey Network Rollout Enabling future business success for our customers © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Ericsson competitive advantage Customer insight and offerings – – – Deep knowledge of customer networks & operations Combination of world class products and services Thought leadership Delivery machine – – – Local & global delivery model Skill & scale Ericsson project methodology Quality assurance – – – Quality systems Training and certification of own, sourced and customer staff Global knowledge sharing & re-use Long term experience to lead in best practices © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Key business opportunities New network deployment Greenfield deployments Deployments in new regions/areas New fiber networks Network modernization Swap / equipment changeouts Network and site optimization Efficient energy solution Mobile Broadband evolution Technology upgrades (e.g. HSPA / LTE) Capacity expansion in Mobile Backhaul IP-fication of existing RAN © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 References China Unicom 3G Roll-Out 2009 – World’s largest green-field network deployment AT&T Broadband Access 2009 – Full systems solution for fixed broadband access Telstra 3GSM National Network 2007 – Largest geographic WCDMA network deployment Metro PCS / USA 2009 – Mobile Broadband (LTE) deployment Eco-smart for TIM in Italy 2009 – Solar-powered sites generating up to 100% of energy needs Vodafone Essar in India 2009 – World record - largest and fastest equipment changeout © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Network roll-out 2008 and 2009 Highlights Net sales 2008: SEK 21.5 b. (+16%) Net sales YTD 2009: SEK 16.4 b. (+18%) More than 1,200 major projects yearly – Network build, expansion and migration Ericsson resources – approximately 10,000 Sourced resources – more than 15,000 – Installation and construction Leadership in network deployment © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 Conclusion Consumer demand force operators to continuously evolve their networks Cost efficiency drives growth in network modernization Capabilities unique to Ericsson puts us in prime position to address this huge market © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3 © Copyright Telefon AB LM Ericsson 2009. All rights reserved 2009-11-3
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