Ericsson charms rivals to use its platform

Financial Standard

By Kenneth Kwama

Swedish telecommunications giant, Ericsson has had mixed fortunes since 1898 when it first entered the Kenyan market, but has of late been mirroring the good fortunes associated with the industry, not just locally, but in other parts of the world too.

In Kenya, its local affiliate, Ericsson Kenya Ltd (EKL), has helped to construct a national telecommunications backbone on which the country’s four mobile phone companies—Safaricom, Zain, Orange and yu, operate on by providing telecommunication equipment and network solutions, which enables them to serve millions of subscribers.

"We offer the most comprehensive managed services. It ranges from designing, building, operating and managing day-to-day operations of a customer’s network, including end-user services and business-support systems amongst others," says Thomas Sonesson, Managing Director Ericsson Kenya.

Simply put, the company’s stable is to provide the basic infrastructure required for a mobile phone to function.

It also supplies the equipment and maintains them on behalf of its clients, the mobile phone companies.

Ericsson managing director Thomas Sonesson says the future of mobile telephony is bright and subscribers are likely to hit 30 million in the next five years. [PHOTO: JENIFER WACHIE/STANDARD]

The infrastructure includes base stations, which basically houses the entire mobile communication system including the technology that allows subscribers to reload their call vouchers, short message service and voice-mail. Perhaps the question to pose is: How does it deal with the conflict of interest, given the fierce rivalry between its clients?

"That is not an issue," says Sonesson. "The operations are tailored to cater for each of our client’s needs.

We have different teams of professionals and engineers that deal separately with each entity so the issue of conflict of interest doesn’t come up," he says.

resource allocation

The Swedish company has virtually locked out its major rival for operations in sub-Saharan Africa, Huawei Technologies of China through what Thomas says is better economies of scale and efficient resource allocation.

The fact that Ericsson has signed contracts with several mobile firms to manage their infrastructures has made sourcing for equipment and management of its operations much cheaper and is thus able to out bid its rivals for major contracts like the ones it signed with the latest entrants into the country’s mobile phone market-Orange and yu.

In such contracts, we are ideally positioned to deliver value to our clients.

"They also offer us the opportunity to build on our strong relationship and develop our collaboration further to deliver future business benefits," says Sonesson. Ericsson also provides its clients with a range of associated professional services to ensure successful network delivery.

Generally, this has helped its partners improve network performance and end-user experience, whilst reducing operational costs.

Being a market leader in 2G and 3G mobile technologies in several countries, the company supplies communications services and manages networks that serve more than 250 million subscribers worldwide.

Our company’s portfolio comprise mobile and fixed network infrastructure, and broadband and multi-media solutions for operators," he says.

bright future

Some of the most iconic changes the firm has brought to the country’s landscape are the giant telephone masts, which it builds.

Some of these masts are perched on high-rise buildings and hilly areas.

According to Sonesson, building a mast is one of the most capital-intensive ventures that the company engages.

He says that averagely, the cost of constructing one mast is about $200,000 (Sh16 million) on a green field. This reduces if the mast is mounted on a rooftop.

Despite such challenges, business has been so robust that in the past one-year alone, the company managed to increase the number of its employees from 89 to 450.

During the same period, the number of vehicles in its fleet also increased from 10 to 245.

Sonesson says that the biggest challenge he faces is managing the company’s 450 employees and the 83 sub-contractors the company has been using for construction of some of the mobile phone network infrastructure.

There’s a big challenge in how they manage their workers and the attendant risks that come with these jobs.

"We can’t be there every day to supervise how they work so we have to rely on them to manage all the processes, but not all have been perfect," he says.

Thomas says that the future of mobile telephony is bright in the country and subscribers are likely to hit 30 million in the next five years, a situation he opines, will open up the business to more competition and thus, better services to customers.

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