Ericsson: LTE gear shipping in volume

Ericsson (NASDAQ:ERIC) is starting to ship long-term evolution (LTE) equipment in volumes as 4G deployments ramp up worldwide, but particularly in the U.S., where Verizon Wireless (NYSE:VZ, NYSE:VOD) and MetroPCS (NYSE:PCS) are both launching Ericsson-built networks this year.

Ericsson chief financial officer Jan Frykhammjar said that sales of its multi-radio platform, the RBS 6000, have picked up all over the world as operators deploying new or upgrading old 3G footprints take advantage of the base station’s next-generation software defined radio capabilities. Those base stations can technically support LTE networks in the future, and Ericsson is also using the platform to support numerous LTE trials around the world. But in North America, however, the RBS 6000 is being installed in high volumes in its LTE configuration as US operators jump ahead of the rest of the world in the 4G race, Frykhammjar said.

Frykhammjar said that Ericsson is installing LTE gear for Verizon, Metro and AT&T (NYSE:T), which plans its 4G launch in 2011, but “the volume shipments are due primarily to one of those customers,” he noted. Though Frykhammjar wouldn’t name names, that customer is most certainly Verizon, which plans a large-scale commercial 4G launch by year end covering 100 million pops in 25-30 major markets. Ericsson and Alcatel-Lucent (NYSE:ALU) are the primary vendors.

Ericsson in the second quarter saw its overall revenues decline 8% and its profits fall short of analysts’ expectation as the telecom infrastructure market continues to drag. But Ericsson is on a roll in North America, reporting 128% year-over-year and 37% quarter-over-quarter revenue increases in the region, while its other global markets suffered declining sales ranging from 7% to 63%.

Much of the boost in sales comes from Ericsson’s recent acquisitions of Nortel Networks CDMA and GSM assets, the revenues of which were fully counted in Ericsson’s Q2 report, but Frykhammjar said Ericsson experienced plenty of organic growth in North America too. That growth was fueled in part by its increasing LTE activity, but also from 3G deployments as the major US operators expanded the capacity and footprints of their high-speed packet access (HSPA) and CDMA EV-DO networks to meet skyrocketing 3G mobile data demand.

North America is now Ericsson’s largest global market accounting for 13.1 billion Swedish Crowns (US $1.78 billion), and 27%, of its 48-billion-crown Q2 revenue. Sales from its Nortel acquisitions factor into those numbers as does its managed service business, which has grown considerably since it was selected to run Sprint’s (NYSE:S) network operations, accounting for a about a third of its year-to-date revenues.
“This has been a really good last few quarters,” Frykhammjar said. “Even if you exclude the [managed services and Nortel businesses, we’ve seen tremendous growth through mobile broadband.”

Nokia Siemens Networks’ (NYSE:NOK, NYSE:SI) Q2 earnings this week saw the opposite trends in North America. It fared better than Ericsson overall, seeing its revenues decline 5% year-over-year, but it’s already underperforming North America region saw a further 18% decline to 181 million Euros—barely more than a tenth of arch-competitor Ericsson’s.

But NSN could see its local fortunes changing soon. Earlier this week, it announced plans to buy all of Motorola’s non-iDEN commercial network assets and revealed it had landed one of the largest single contracts in the industry, an equipment and network management deal worth $7 billion with new LTE operator LightSquared.