The Communications subsector in Q4 2015 reported a quarter-over-quarter revenue jump of 13.4%, but declined 10.6% year over year. The year-over-year decline was mostly due to Ericsson and Nokia, both of which were affected by unfavorable foreign currency exchange when translating to USD from their reporting currencies of SEK and EUR, respectively. On the other hand, the quarter-over-quarter jump was also due to Ericsson and Nokia, which benefited from a recovering mobile broadband market.
During the fourth quarter of 2015, mobile broadband in North America remained stable, while 4G deployments in Mainland China recovered after a weak third quarter. Emerging markets, such as India, Indonesia and Mexico, remained strong. While markets such as Russia, Brazil and parts of the Middle East continued to be weak, mainly due to depressed oil prices and other macroeconomic issues. Investments in Europe were driven by the transition from 3G to 4G and capacity enhancements. Operators increased their investments in telecom core networks, driven by deployment of new service offerings such as Voice over LTE.
The Communications market is also being driven by high growth in the wireless local area network (WLAN) market. According to data released in December, the combined consumer and enterprise worldwide WLAN market increased 2.1% year over year in Q3 2015. The 802.11ac standard continues on its brisk adoption path and now accounts for 57% of dependent access point unit shipments and 72.7% of dependent access point revenues. Increased demand on enterprise WLANs will continue to be a driving factor in this transition, especially as new enterprise mobility use cases are adopted and IoT applications move into the mainstream.1
The enterprise WLAN market saw its strongest growth in Asia/Pacific excluding Japan (APeJ), which grew 14% year over year in Q3 2015. Within the APeJ region, China increased 19.8%, while India increased 48.4%. The North American region grew 4.9% year over year as a result of the ERate funding streams in K-12 education in the US. In the Europe, Middle East, and Africa (EMEA) region, Western Europe grew 2.3% year over year.1
In December 2015, IDC released Q3 2015 consumer WLAN market revenue growth which showed an increase of 16.2% quarter over quarter, though it was down -0.4% on a year-over-year basis. The adoption of the 802.11ac standard in the consumer market has been significantly slower than the enterprise segment. Currently the 802.11ac standard accounts for just 15.3% of shipments and 36% of revenue.1
On 4th December 2015, Nokia completed the sale of its HERE digital mapping and location services business to a consortium of leading automotive companies, comprising AUDI AG, BMW Group and Daimler AG. Nokia booked a gain of approximately €1.1 billion in Q4 2015 as part of discontinued operations. Nokia’s Q4 2015 revenue of US$4.0 billion was down 22% year over year, but sequentially it rose by around 17%. The year-over-year decline was primarily due to unfavorable foreign currency exchange when translating to USD from its reporting currency, the EUR. Sale of its HERE business also contributed to lower revenue in Q4 2015. In terms of EUR, Q4 2015 revenue of €3.6 billion was up 3% over a restated €3.5 billion in Q4 2014. While Nokia Networks revenue dipped by 5% year over year, Nokia Technologies revenue jumped 170% owing to a contribution from the arbitration award related to the company’s licensing agreement with Samsung. Nokia’s net income of €575 million was up 74% year over year and 94% quarter over quarter.
Ericsson’s Q4 2015 revenue of US$8.7 billion was down 13% year over year, but sequentially it rose by around 24%. Like Nokia, Ericsson’s year-over-year decline was primarily due to unfavorable foreign currency exchange when translating to USD from its reporting currency, the SEK. In terms of SEK, Q4 2015 revenue of SEK 73.6 billion was up 8% over SEK 68 billion in Q4 2014. Ericsson witnessed growth in all its businesses, but the strongest growth was posted by Support Solutions (+40%). Net income of SEK 7 billion was up 68% year over year and 124% quarter over quarter.
During Q4 2015, Motorola completed its US$1 billion acquisition of Airwave Communications. Airwave is the largest private operator of a public safety network in the world, delivering mission critical voice and data communications to more than 300 public service agencies in Great Britain. It also introduced its next-generation digital mobile radio solution for commercial customers that complies with the DMR III standard. Public safety LTE trials were also executed around the world, spanning devices, land-mobile radio & LTE interoperability, applications, and deployable networks.
1IDC, Dec 2015