Ericsson teams with Cisco to combine Internet, mobile expertise

[STOCKHOLM] Ericsson is partnering with Cisco Systems to combine their wireless and Internet-network capabilities in a bid to fend off rivals such as Nokia.

Stockholm-based Ericsson, the biggest maker of wireless networks, and San Jose, California-based Cisco, the largest maker of Internet-network gear such as routers and switches, said on Monday they will cooperate in development and delivery of systems to telecommunications carriers and other customers. The companies predict added revenue of US$1 billion or more for each company by the end of 2018 from the partnership.

The pact lets Ericsson rely on Cisco's expertise in managing Internet traffic, helping it respond to Nokia's expansion in that field. Nokia is close to completing its US$17.6- billion purchase of French rival Alcatel-Lucent SA to gain scale in research and development and Internet-protocol routing, a technology allowing large amounts of data to more efficiently travel through a network.

"I don't believe in big mergers - this is by far the best solution you can get," Ericsson chief executive officer Hans Vestberg said in a phone interview.

"This is much faster and more efficient for the market and of course it's getting together with the No 1 in IP." Shares of Ericsson gained 1.5 per cent to 86.55 kronor at 9:29 am in Stockholm, giving the company a market value of 285 billion kronor (S$46.6 billion). Cisco rose less than 0.1 per cent in New York on Friday, for a market value of US$145 billion.

BLOOMBERG