Jump in Vendor M&A Activity Will Reshape the Wireless Infrastructure Supply Chain, New Report Finds

Shrinking margins and the need to compete for contracts from big operators are driving wireless vendor mergers and partnerships, says Unstrung Insider

PRNewswire
NEW YORK
Oct 3, 2006

NEW YORK, Oct. 3 /PRNewswire/ -- The latest round of mergers, acquisitions, and partnerships involving some of the world's biggest suppliers of wireless infrastructure equipment makers will have significant ramifications for the entire wireless infrastructure supply chain, according to a new report released by Unstrung Insider (http://www.unstrung.com/insider ), a paid research service of Light Reading Inc. (http://www.lightreading.com/ ).

"Vendor M&A Frenzy: What Happens Next" analyzes the impact of consolidation on the cellular network equipment market and assesses key growth segments in a market that is expected to generate more than $55 billion in revenue this year, but which faces modest overall growth prospects. The report includes detailed market share breakouts for worldwide wireless infrastructure revenues by vendor and by type of technology (CDMA, GSM, and UMTS).

"The economic logic for consolidation in the cellular network equipment market has long been compelling," notes Gabriel Brown, Chief Analyst for Unstrung Insider and author of the report. "In a chain of events sparked by service-provider consolidation in North America, the M&A deadlock has been broken and the sector is now undergoing a deep restructuring process."

Major deals involving industry giants Alcatel, Ericsson, Huawei, Lucent Technologies, Nokia, Nortel Networks, Siemens, and others are creating a de facto oligarchy of infrastructure suppliers that will account for more than 80 percent of worldwide cellular infrastructure revenues, says Brown. "Size directly influences a vendor's ability to invest in R&D, optimize the supply chain and manufacturing, provide financing, achieve geographic diversity, and, ultimately, make a profit."

Key findings of "Vendor M&A Frenzy: What Happens Next" include the following:

* The cellular infrastructure market in the first half of 2006 was flat
relative to the first half of 2005, but with lower profitability; this
decline in profit margins is a key factor driving vendor consolidation.
* Post-consolidation market shares show the top three vendors -- Ericsson,
Alcatel-Lucent, and Nokia-Siemens -- will account for almost 70 percent
of the $56 billion worldwide wireless infrastructure market in 2006.
* 3G systems will account for about 20 percent of wireless infrastructure
revenues this year, growing to 50% of the market in 2010 -- another
critical market dynamic driving vendor M&A and partnership activity.
* Smaller vendors will come under even greater pressure in the next few
years, with some abandoning UMTS 3G in favor of pre-positioning in
future markets using OFDMA technologies, such as WiMax.

Companies covered in this report include: Alcatel; Ericsson AB; Huawei Technologies Co. Ltd; Lucent Technologies Inc.; Motorola Inc.; NEC Corp.; Nokia Corp.; Nortel Networks Ltd.; Siemens AG; Samsung Electronics Co. Ltd.; and ZTE Corp.

"Vendor M&A Frenzy: What Happens Next" is available as part of an annual subscription (12 issues) to Unstrung Insider, priced at $1,595. Individual reports are available for $900.

To subscribe, or for more information about this report, please visit: http://www.unstrung.com/insider . For more information about Light Reading's full line of Insider research services, please visit: http://www.lightreading.com/research.

To request a free executive summary of the report, or for details on multi-user licensing options, please contact:

Jeff Claudino
Director of Sales
Insider Research Services
619-229-9940
claudino@lightreading.com
Press/analyst contact:
Dennis Mendyk
Managing Director
Heavy Reading
201-587-2154
mendyk@heavyreading.com
About Light Reading

Founded in 2000, Light Reading Inc. (http://www.lightreading.com/ ) is the ultimate source for technology and financial analysis of the communications industry, leading the media sector in terms of traffic, content, and reputation. It reaches an extensive audience of executives and technologists within the telecom and enterprise networking communities, as well as the financial/industry analysts and investors who track these sectors. Light Reading was acquired by United Business Media in August 2005, and operates as a unit of CMP Technology.

About CMP Technology

CMP Technology (http://www.cmp.com/ ) is a marketing solutions company serving the technology industry. Through its market-leading portfolio of trusted information brands, CMP has earned the confidence of more technology professionals than any other media company. As a result, CMP is the premier provider of access, insight and actionable programs designed to connect sellers and buyers in ways that yield superior return on investment. CMP Technology is a subsidiary of United Business Media (http://www.unitedbusinessmedia.com/ ), a global provider of news distribution and specialist information services with a market capitalization of more than $3 billion.

SOURCE: Unstrung Insider

CONTACT: Jeff Claudino, Director of Sales, Insider Research Services,
+1-619-229-9940, claudino@lightreading.com, or Press-analyst contact: Dennis
Mendyk, Managing Director of Heavy Reading, +1-201-587-2154,
mendyk@heavyreading.com

Web site: http://www.unstrung.com/insider
http://www.lightreading.com/
http://www.lightreading.com/research
http://www.cmp.com/
http://www.unitedbusinessmedia.com/