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Ericsson media head sees sales lift from telecoms-media consolidation
December 22, 2016 / 11:17 AM / a year ago

Ericsson media head sees sales lift from telecoms-media consolidation

STOCKHOLM (Reuters) - Ericsson sees more tie-ups between telecom operators and media companies after AT&T Inc’s planned acquisition of Time Warner Inc, offering some hope for the no-growth telecom equipment gear maker, its media chief told Reuters.

A general view of an office of Swedish telecom giant Ericsson is seen in Lund, Sweden, September 18, 2014. REUTERS/Stig-Ake Jonsson/TT News Agency/Files

Per Borgklint said the industry will likely see more such acquisitions as operators hunt for more content while media outlets seek more efficient ways to reach clients.

AT&T’s purchase of Time Warner will have a positive effect on Ericsson in the long term though in the shorter term it may lead to slower decision-making, Borgklint said in an interview. AT&T is Ericsson media’s biggest customer among telecom firms.

“It’ll be up to us to capitalise on it, but it’s in general very positive that they have a great interest where we are active,” he said.

Borgklint said the business is a good fit for the firm due to sales and technical synergies with its networks and services operations.

Ericsson’s media business eyes turning break even in terms of profit in the second half of 2017, thanks to a push into new Internet-based cloud solutions.

Ericsson, which has seen core revenue fall for the past three years, has predicted annual growth of around 10 percent for its media unit for the next couple of years, in line with the market which is fragmented with many competitors in different niches. The division makes up 5 percent of Ericsson’s total revenue.

The Silicon Valley-based executive said sales growth in media will be driven by a move from traditional broadcast media to individualised, increasingly on-demand media consumption by mobile users on the go with their phones or tablets.

Editing by Mia Shanley and Eric Auchard

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