Ericsson to invest over $230 million in Brazil to build new 5G assembly line

Reuters SAO PAULO | Updated on November 26, 2019 Published on November 26, 2019

Ericsson   -  Bloomberg

Swedish telecoms equipment maker Ericsson plans to invest 1 billion reais ($238.30 million) in Brazil to add a new assembly line dedicated to 5th generation technology (5G) for its Latin American operations, an executive told Reuters on Monday.

The move is likely to stir competition with Finland's Nokia and China's Huawei Technologies Co, which also have factories in Sao Paulo state and are racing to lead 5G deployment in Brazil.

“We already export 40% of all equipment assembled in Brazil to Latin American countries, and it will be no different with 5G,” said Eduardo Ricotta, president of Ericsson Latam South, in a phone interview after meeting with President Jair Bolsonaro.

The investment will be made between 2020 and 2025 and includes the cost of hiring and acquisition of machinery, among other expenses, he added.

Initially, the Swedish company will spend 200 million reais to set up the new 5G assembly line in its factory located in Sao Jose dos Campos, an industrial city near Sao Paulo, Ricotta said.

“We expect this new assembly line to be operating as of the third-quarter of 2020, but the schedule will also depend on the 5G auction,” he said.

Brazil telecoms regulator Anatel is still determining the rules for the 5G auction, which was initially scheduled for next March but later postponed as tests on interference with other services are still ongoing.

“Our business plans always take into account a little deviation, but we believe now is the right timing, as this factory will also serve other countries in Latin America,” Ricotta said, without disclosing the main destinations.

But in case Brazils 5G auction is further postponed to 2021, Ericsson estimates a loss of around 25 billion reais for public coffers, according to a study released earlier in October. In general, the company expects 5G deployment in Brazil to trigger approximately 10 billion reais in direct investments and additional 250 million reais in research and development, creating over 200,000 jobs in the country, it said in the same document.

Ricotta's comments come more than three months after Ericsson rival Huawei announced plans to build an $800 million smartphone plant also in Sao Paulo state over the next three years, in a push to ramp up its Latin American presence against U.S. objections.

According to Ricotta, 23 of the 5G networks already operating are using Ericsson's technology and the group has signed 80 agreements around the world.

“We are the only manufacturer with operational 5G networks in all continents and these 23 are all large size networks, especially in the United States,” he said.

In its latest mobility report disclosed on Monday, Ericsson estimated that 65% of the worlds population will have access to 5G networks by 2025, with 2.6 billion subscriptions.

Published on November 26, 2019

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.