Ericsson Turns to Mobile Wallet Amid Short-Term Uncertainty
Ericsson AB, the world’s largest maker of wireless networking equipment, is making a new push into services such as money transfers over handsets, as short- term uncertainties weigh on growth of its traditional business, Chief Executive Officer Hans Vestberg said in an interview.
Ericsson, which makes about 37 percent of its revenue through services, said yesterday at the Mobile World Congress in Barcelona that it teamed up with Western Union Co. (WU) to grab a share of the $800 billion worth of ’m-commerce’ it estimates will be recorded by 2016. Such transactions allow customers to use their prepaid phone credit to pay for purchases on handsets.
“In the long term the fundamentals are definitely there,” Vestberg said of the growth drivers in the network-equipment market. “In the short term, decisions may depend on what carriers see in the environment around them.”
Ericsson’s fourth-quarter profit missed estimates on slower spending from North American (PAL) customers. AT&T Inc. (T) revised its spending plans while it mounted a bid for T-Mobile USA (166783Q) that collapsed in December, while T-Mobile had put its plans for a network based on the so-called long-term evolution technology on hold until last week. Verizon slowed capital expenditure compared with last few years, according to the company’s guidance.
Ericsson, based in Stockholm, fell as much as 1.1 percent to 65.85 kronor and traded 0.6 percent lower at 66.15 kronor as of 9:18 a.m. in the Swedish capital.
The company, which competes with Alcatel-Lucent, Nokia Siemens Networks, Huawei Technologies Co. and ZTE Corp. (763), said it was discussing with telecom operators in different regions to sell its mobile wallet after it signed its first contract with MTN Group (MTN) in the Middle-East and Africa.
Ericsson wants to develop new products and services internally, Vestberg said. “Our priority is organic growth,” he said. Asked whether he was looking to buy patents from Eastman Kodak Co. (EKDKQ), the photography pioneer that filed for bankruptcy protection this year, Vestberg said he was not looking to acquire more patents.
“We have 30,000 patents,” the CEO said. “We have the most patents in 2G, 3G and 4G in the industry and we’re very happy with that portfolio. We’re not looking to get more.”
Vestberg said yesterday that Ericsson is not interested in buying assets Nokia Siemens, the phone equipment venture between Nokia Oyj (NOK1V) and Siemens AG (SIE), has put up for sale. Shares of Ericsson closed 1.7 percent lower on the Stockholm exchange yesterday.
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