Massive deployment of high-speed wireless networks throughout the world has opened up a new market for telecom outsourcing and managed services for several telecom equipment manufacturing firms. The next-generation (3G/4G) wireless networks are aiming to cope with substantial demand for high-speed wireless data services and mobile video.
Telecom service providers are now typically looking at providing the converged IP-based network, offering bundled solutions for triple play voice, video and data. This requires the implementation of complex network architecture.
The telecom outsourcing market generally includes network implementation & maintenance, system integration & managed services, and consulting. In order to minimize their costs, carriers try to concentrate on developing new services, implement a service-oriented business model, and marketing.
The market for basic network operation is increasingly seeing the entry of infrastructure suppliers. This generates a huge opportunity for telecoms equipment manufacturers to encash.
According to various industry research, the approximate global size of this market is likely to be between $250 billion - $275 billion. Asia alone is expected to generate 25% of the total.
As of now, the undisputed leader in the telecom managed services market is
LM Ericsson AB (
ERIC). Nokia-Siemens Network; a joint venture between
Nokia Corp (
NOK) &
Siemens AG (
SI), and
Alcatel-Lucent (
ALU) are the two closest rivals.
During the first half of 2009, these three entities won 20 large managed services deals across the world. Currently, Ericsson generates approximately $2.8 billion of quarterly revenue through managed services, whereas Nokia-Siemens Network generates around $2 billion and Alcatel-Lucent generates around $1.25 billion of quarterly revenue.
We believe other wireless gear makers that are best positioned to gain from this opportunity include the two Chinese giants Huawei Technologies Co. Ltd., and ZTE Corp.
Cisco Systems Inc (
CSCO) could also emerge as a major player in the long-term.
