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Mobile broadband demand pushes Ericsson Brazil plant to capacity

The exterior of Ericsson's headquarters are seen in Stockholm April 30, 2009. REUTERS/Bob Strong
The exterior of Ericsson's headquarters are seen in Stockholm April 30, 2009. REUTERS/Bob Strong

By Sérgio Spagnuolo

RIO DE JANEIRO (Reuters) - Strong demand for mobile broadband equipment in Latin America will keep Ericsson's plant in Brazil at full capacity this year, says a senior executive at the telecom equipment manufacturer.

Mobile phone operators in Brazil are scrambling to improve their networks after heavy scrutiny from regulators because of poor service and a lack of investment in mobile infrastructure in recent years. The problems came despite a ballooning client base in Latin America's biggest economy.

But strong demand for faster, smartphone-friendly networks in neighboring countries is also fueling a growing need for mobile equipment elsewhere in the region.

"We see a growing demand in Latin America, both in 3G and 4G," said Andre Gildin, Ericsson's market intelligence director for the region, referring to the higher-speed networks that Brazil, Mexico, Colombia and other countries are rolling out.

The Swedish-based company expects 3G equipment to make up most of the demand this year in Brazil. Demand for 4G equipment is growing too as the industry begins building the country's fourth-generation mobile network.

The 4G effort is beginning in cities that in June will host soccer games during the Confederations Cup. The contest is a prelude to next year's World Cup, a much bigger event that is expected to strain Brazil's mobile telephone networks.

In 2012, about 40,000 pieces of mobile signal transmission equipment were produced at Ericsson's factory in the state of Sao Paulo. That took the factory to its production limit, a level that should be reached again by the end of the year.

"Our expectations are to finish this year with a similar number", Gildin said in an interview this week.

Half of this year's production will supply the Brazilian market, he added, while the rest would be exported to other Latin American countries. Big customers include operators in Mexico, which is implementing its 4G network, and Colombia, which is expanding both 4G and 3G services.

Argentina, Chile and Peru are also improving their mobile phone networks.

Ericsson says it has about 40 percent of the market in Brazil for 3G equipment. While the 3G network still has a long way to go in the country, the initial steps toward 4G services are helping the company get an early lead in that segment too, Gildin said.

Ericsson provides telecom gear, both 3G and 4G, to all four major Brazilian mobile operators - Telefonica's Vivo, Oi, Telecom Italia's TIM and America Movil's Claro.

Claro and Oi recently started to offer 4G services. Vivo and TIM are expect to announce their 4G plans next week.

Anatel, the Brazilian telecoms regulator, gave operators a deadline of next Tuesday to launch their 4G networks in the cities that will host the Confederations Cup.

(Editing by Paulo Prada and Peter Cooney)

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