Telia says 3G will not produce profits for ten years
By Total Telecom staff
08 March 2001
Swedish incumbent Telia said on Wednesday that it may take ten years before it turns a profit on 3G mobile services, although the business will be up and running within four.
Osten Makitalo, head of strategy for the operator's wireless arm, Telia Mobile, told Reuters at an IT conference that "It will take about four years before it really picks up momentum," but added, "We must expect it to take around 10 years [to become profitable]."
He also warned that 3G technology does not have an unlimited shelf-life. "If it takes longer it will be money down the drain because the technology will probably be outdated by then," he said.
But Reuters reported that Bert Ericson, head of forecasting at Swedish equipment manufacturer Ericsson, had even gloomier predictions, telling the conference that it could take up to 20 years before operators started making a profit on 3G investments.
The news service reported that a second Telia executive further muddied the waters when he said he expected Telia's 3G operations in Sweden, which are conducted in cooperation with rival operator Tele2, to turn a profit within only three or four years.
Telia failed to win its own Swedish UMTS license in the country's beauty contest in December and opted to team up with Netcom's mobile arm Tele2, which won a license, to jointly invest in a national 3G network.
The companies will spend 18 billion crowns ($1.85 billion) on their 18,000-base station network, which Makitalo said on Wednesday would reach nationwide coverage by the end of 2003.
Telia has already shown willingness to explore other avenues to build mobile revenues, including through the virtual mobile operator route. Telia Mobile's president, Kenneth Karlberg, told Total Telecom earlier this week that it may expand its horizons beyond current deals with Swedish MVNOs Tele1 and Sense to include the U.K.'s Virgin Mobile. "Telia is interested in expanding its MVNO operations in Europe and globally ... maybe Virgin Mobile and Telia Mobile can cooperate," he said. |
