L M Ericsson Telefon AB recently announced plans to step up its activities in Spain and this will include further investment in the telecommunications equipment manufacturer Indelec SA, based in Zamudio in the Basque country, in which the Swedish group currently has a 50% stake. It is hoped that by 1999 the number of employees at Indelec will rise to 300 (there are currently 108) to guarantee export production worth some $400m, which will make Indelec one of Ericsson’s major world export centres serving emergent markets. Having secured a prime contract to supply equipment to the new cellular operator Airtel (the first order is worth $126m), Ericsson Espana has announced an investment of $45.8m in accordance with its 1995-1999 industrial plan, with almost half this figure earmarked for the expansion of industrial production. Ericsson currently has a 50% holding in Indelec, the Basque Government has 40% and Basque bank BBK – Bilbao Bizcaia Kutxa, 10%, but is seeking to increase its stake to 90%. To begin with, Indelec will concentrate on the production of fixed cellular terminals, similar to those currently being used by Telefonica de Espana SA as part of the latter’s programme to bring telephony to rural and remote areas, and will subsequently begin production of the base stations essential for the extension of cellular telephony networks. Indeed 39 countries now have or are in the process of extending digital networks, and the production centre in Spain will become Ericsson’s fourth around the world, joining those in Gavle, Sweden; Melbourne, Australia; and Carlton, UK. Siemens AG has also announced that it will be producing base stations in Spain. Indelec has already established commercial contacts with Malaysia, Indonesia and Thailand with a view to supplying Radio Local Loop terminals and will sell these to all Ericsson subsidiaries that obtain contracts to set up this type of network. Similar contracts are currently being negotiated in Argentina, Peru and Chile. Telefonica, which provides Ericsson with the lion’s share of its turnover in Spain, has already placed an order worth $23.8m for 40,000 of these terminals. The first large order won from the private cellular consortium Airtel appears to have been instrumental in convincing Stockholm to agree to the installation in Spain of an Ericsson support office to support cellular network management in Spain, Greece and Portugal. The Spanish office becomes the third of its kind in Europe (existing centres are in Holland and Germany) and it is hoped that it will also come to support cellular networks as they are set up in the whole of the Mediterranean area, including Italy, Cyprus and North Africa, areas already targeted by Indelec for sales of its Zamudio-manufactured terminals. Ericsson supplies to both Airtel and Telefonica and in light of the rivalry between the two operators, has had to implement a series of measures to ensure the independence of the work it undertakes for each client. To that end, it has taken pains to establish its respective operation centres for Airtel and Telefonica in different parts of Madrid.
