Siemens aims to overtake Nokia in mobile

Doug Young

HONG KONG: Germany's Siemens AG said on Tuesday its mobile communications arm will spend hundreds of millions of euros in Asia this year -- including on a potential major acquisition in China -- in its bid to replace Nokia as the No. 2 global player.

Siemens was the world's third-biggest mobile telecoms network equipment supplier last year with about 13 percent of the market, behind industry leader Ericsson at 27 percent and Nokia at 14 percent, according to research firm Gartner.

The number-four player, Motorola Inc., had about 11 percent of a global wireless infrastructure market worth $49 billion last year, which is expected to grow 10 percent in 2005.

Siemens is aiming to take over the No. 2 spot in the next two to three years, with a goal of retaining the position over the longer term, Christoph Caselitz, president of Siemens mobile networks division, told Reuters.

"I want to have a sustainable No. 2 position," he said in an interview before the opening of the 3G World Congress in Hong Kong. "I don't want to be at 14 percent where my competitor is at 13.5 percent."

The industrial conglomerate, which recently sold its mobile handset unit to Taiwan's BenQ Corp., expects Asia to be a key growth engine for wireless mobile, as many of the region's carriers construct third generation (3G) mobile networks.

CHINA

Its position in China is already strong, with the company holding 6-7 percent of the mobile network equipment contracts to date for China Mobile, the nation's leading mobile carrier, and 25-26 percent of GSM network contracts for the No. 2 player, China Unicom, according to Gartner.

Caselitz said he aims to boost his division's share of the market in 3G, which many expect to generate more than $10 billion worth of new purchasing in the first three years after licences are awarded, most likely in the middle of next year.

He added that Siemens is also studying potential acquisition targets in the market, with the potential for a major deal in the next 12 to 24 months.

"We are doing some things and there are some things on our short list already," he said. "You can expect to see that Siemens is going to make some moves, but not at any costs."

He declined to be more specific. But recent reports in the Chinese media have indicated that Siemens may be interested in buying Harbour Networks Ltd., a networking equipment company founded by a former employee of Huawei Technologies, China's leading telecoms equipment maker.

Harbour Networks was planning a Hong Kong initial public offering in 2004 worth as much as $400 million, but later delayed the deal amid cooling market sentiment for such offerings.

Caselitz said that his division's overall Asian sales grew by 20 percent during the past fiscal year, significantly outpacing the broader market.

"We will be enjoying an above average share of this region's breathtaking growth," he said.

"This fiscal year alone, we will be investing triple-digit millions of euros in Asia, including funding for research and development in the field of mobile network technology."

He added that the company will also expand its partnerships in the region. To that end, it announced new partnerships with telecoms supplier Poson in China, and with the Infocomm Development Authority in Singapore.