Ericsson gets 3G contract

SINGAPORE: Ericsson beat off two rival bidders to win a S$220 million ($125 million) deal to supply and install third-generation (3G) mobile network equipment for Singapore Telecommunications Ltd, SingTel said.

SingTel, Asia's sixth-largest telephone group, said the world's largest telecoms equipment maker won out over shortlisted bids from Finland's Nokia, and a consortium including Germany's Siemens AG, NEC Corp and Itochu Corp of Japan.

The five-year contract for SingTel's domestic mobile network was agreed after an evaluation that lasted nearly three years.

Ericsson has garnered over 40 percent of 3G contracts worldwide, selling the high-speed networks to more than 30 operators in 27 countries.

SingTel Mobile Chief Executive Officer Lucas Chow said prices of 3G hardware infrastructure and equipment have dropped sharply over the last three years following the peak of the 3G boom.

He said SingTel would be prudent in deploying its 3G network, which would be ready in Singapore's central business district by early next year and fully operational by the end of 2004.

"We will commit more infrastructure investment only when there is significant market demand for 3G services over the next few years," Chow added.

The technology allows high-speed transmission of data and video by mobile phone, and SingTel said it expects demand to be driven by video messaging and conferencing, downloading of video clips and mobile gaming.

NO NEAR-TERM REVENUE BOOST

Chow said he was neither bullish nor pessimistic about 3G prospects in Singapore.

"For any new service, it will take time to be accepted by the market. We need to prove to customers that it adds value," he told reporters at a briefing.

Given this, SingTel Mobile does not expect a revenue boost from 3G in the near term.

"We estimate about three to five years before it becomes a significant contributor to our bottom and top lines," Chow said.

SingTel's 500,000 customers already using its highspeed GPRS (General Packet Radio Service) network would be among the first to move over to 3G services, but take-up rates would depend on the attractiveness of the service and handset replacement rates, Chow said.

Singapore's handset replacement rates have jumped to between six and 10 months, compared with two years previously, he added.

Chow said 3G handsets would be available from early next year, but earlier batches would be priced at the higher end.

He declined to reveal charges for 3G services, noting that the aim was to make the service as affordable as possible.

The city-state's telecoms watchdog, the Infocomm Development Authority of Singapore, requires Singapore's three mobile operators to roll out nationwide 3G services by the end of 2004.

SingTel paid S$100 million for its 3G licence in April 2001.

The telecoms firm, whose operations outside Singapore generate more than two-thirds of its revenue and half of its pre-tax earnings, has been searching for new revenue streams to expand in an otherwise mature and saturated domestic market. More than two out of every three Singaporeans have a mobile phone.

© Reuters