How has the merger between Nokia and Siemens panned out?

It is exactly a year since the merger and I would say it has panned out very advantageously. We had, in fact, calculated the benefits much before we decided on the merger. With this merger, we bring the benefits of scale and global reach, plus a deep understanding of operator business, an industry-leading R&D organisation, and a wide range of services, products and solutions to our customers.

Customers demand a partner who understands the fixed and mobile world and knows how infrastructure and applications need to work together. We are that partner. As an industry leader, we have an excellent foundation of great people, global scale, strong parent companies, deep customer relationships and a shared heritage of innovation.

Did you see any downside to the merger?

We saw only positives. The merger is shaping up well and we are making steady progress on it. We have put in a lot of effort towards integrating two large organisations while not losing customer focus and have been successful to a great extent. Most of all, as an organisation we are binding into a common culture, which is most challenging in any merger of such a large scale. The process is still ongoing. However today, we can rightfully say that we have created a Nokia Siemens Networks (NSN) identity and are on our way to making it more stable and more meaningful to everybody.

How important is the Indian telecom market for NSN?

India is very significant as one of the new growth markets. It is also significant in terms of being a global base for our business. A few months ago, we announced that we would be shifting our global base for our services business to India.

India is currently the world’s second fastest growing economy and is estimated to be the fourth largest by 2025. Globally, NSN expects a 100-fold growth in network traffic at an ever lower cost per bit over the coming years. The majority of this growth is expected to come from emerging and developing markets, including India. This is a challenge that calls for innovation. A market like India provides an ideal environment for us to create greater efficiency and a more rapid rate of progress. India is not the only place where innovation happens; however, our global network can tap into the advancements and the lessons we learn from this market.

Over the next few years, we will see India build a robust and truly national telecom infrastructure that will enable it to deliver ubiquitous, cost-effective connectivity to its citizens and to businesses.

How has the company’s performance been in the past one year?

NSN was formed on April 1, 2007 with the merger of Nokia Networks and Siemens’ carrier infrastructure business globally. In India, it was a merger of a big size. In its first year of operations, NSN India has done extremely well to manage the integration challenges of a merger and at the same time, grow customer confidence/acceptability for the new entity. This is reflected in the strong business momentum we have maintained through a mix of expansion contracts and an entry into key competitors’ clients.

What does the entry of new operators into the Indian telecom market mean for NSN in terms of business opportunities?

At the moment, we roll out over 4,000 sites a month, something not many players can do. The new players have paid a lot for their licences and for spectrum, so the earlier they roll out the better it is for them. We can guarantee they have the fastest rollout.

However, looking at new operators alone isn’t a fair representation of the market opportunity that exists here. The reality is that all segments of the Indian communications equipment market ?? whether it’s wireless, wireline or broadband ?? will see tremendous investments. NSN, with its strong market share, end-to-end technology solutions and strong execution capabilities, is ideally positioned to address these market opportunities and build long-term strategic partnerships with existing clients and new entrants.

What are NSN’s 3G and Wi-Max plans?

NSN strongly believes in multi-radio technology, which includes WCDMA/ HSPA as well as Wi-Max, since each radio technology has its advantages. For us, WCDMA/HSPA and Wi-Max are not competing but complementing technologies. The key deciding factors in choosing the appropriate technology are only the environment, application and business case of a service provider. For example, operators who are already committed to GSM/EDGE/WCDMA/HSPA/LTE (3GPP Evolution) by having deployed GSM/ EDGE networks may find it most efficient to offer broadband access and higher voice capacity through WCDMA/ HSPA/LTE. They also have the option to complement their existing network with Wi-Max. This would be very advantageous for end-users as the majority of high-end terminals in the market already support WCDMA/ HSPA. On the other hand, greenfield operators who have not committed to any evolution path may prefer nationwide Wi-Max-based networks to offer both voice and data services.

NSN has a common platform approach for GSM/EDGE, WCDMA/ HSPA,Wi-Max and, in the future, LTE. We optimise opex efficiency by enabling common operational procedures through our common Flexi BTS platform and one OSS ?? now and in the future.

What is the company’s single biggest challenge in today’s environment?

One key challenge we face is of growth ?? being able to constantly scale up to tap all the new market opportunities that emerge. Related to growth and also related to changing technologies is the HR challenge ?? to build up the right competency, in the right quantity in a big organisation such as ours. This is a very specific challenge which we take very seriously because if you want to be a value player and add value to your customers by making them more competitive, you need the right people. We are thinking of new models of hiring people in different places in India.

As for the industry, several smaller challenges exist. From an economic perspective, the two key challenges for equipment providers are quick and cost-effective roll-out of networks in rural areas in the context of declining equipment prices and simultaneously investing in creating products/solutions that enable viable business models that drive down the total cost of ownership (TCO) for operators and the affordability barrier for the common man.

From a technical perspective, there are a host of challenges associated with the rural areas. These include limited electricity supply, equipment security, network planning and roll-out based on the type of terrain and the addressable population (setting up a network in a city where the population is clustered versus setting up a network in the hills where the population is scattered, creating issues such as tower line of sight and coverage planning). Postdeployment maintenance and running of networks, especially in the case of managed services, are other concerns.

However, these challenges are being addressed through serviceand productlevel innovations to ensure that the industry’s rate of growth is on track.

How does NSN differentiate itself from other technology providers?

In India, our USP is clearly our rollout capability. We have a very wide portfolio covering most of the entrant solutions. The second USP is that we are beefing up our global presence in India which gives us, as an Indian organisation, preferred access to knowledge and to the resources we have in the country.

Which region contributes the maximum to the company’s topline?

NSN is present and is very active in all markets ?? mature as well emerging markets. There is a difference in terms of setup and focus in both markets, and we are clear that both markets contribute strongly to the topline. We also have to manage the mature markets because we want to remain profitable there. I would not like to comment on the specific contribution of different regions.

What is the road ahead for the company? What are the specific thrust areas?

There are three specific thrust areas for NSN India in 2008. These are:

  • Reducing TCO for mobile services to be more pervasive and affordable. At the urban level, we are helping reduce the overall TCO by improving spectral efficiency and providing a host of services including managed services. At the rural level, we have developed the breakthrough village connection solution.
  • Offering an energy efficient solution since mobile base station sites consume the most energy in telecom networks. The energy use of a typical base station site can be reduced by up to 70 per cent with our range of energy efficiency solutions, launched in November 2007. This leads to financial savings. Moreover, in a typical network with approximately 5,000 base stations, serving a large metropolitan area, these innovations would prevent around 73,000 tonnes of CO2 from being emitted. 
  • We are also focusing on renewable energy solutions, especially for remote rural areas or where electricity is unreliable or non-existent. We have provided base stations running on solar and wind energy in over 25 countries, including India. Green thinking is an integral part of NSN’s business and ongoing product plans. This allows us to work closely with operator customers to evaluate the performance of installed equipment and to implement the most environmentally sustainable solutions in the future. An example is the recent NSN partnership with ACME Tele Power to jointly innovate and offer efficient operation, maintenance and energy management solutions to telecom operators.

What level of investments are you looking at over the next two-three years?

Last year, NSN committed an investment of $100 million in India over the next three years as part of its effort to further strengthen all aspects of its local operations including sales and marketing, manufacturing, R&D and global services. The aim is to better address and drive the growth of the Indian mobile industry and to better serve its customers.

The investment will include setting up a wireless network equipment manufacturing facility in Tamil Nadu, new offices, further development of an existing R&D centre, and expanding the Global Networks Solution Centre.

What is NSN’s market position globally?

We are one of the world’s largest network communications companies with 60,000 employees and a leading position in all the key markets. In terms of market position, we are number two in wireless networks and operator services, and are number three in wireline networks.