Stockholm-based company Ericsson will primarily focus on fifth generation networks and developing operators’ networks in line with the 5G technology evolution, Sameh Shoukry, country manager for Egypt at Ericsson, told Daily News Egypt.
Shoukry added that the ultra-low latency and reliable communication of 5G networks will allow factories to cut cables to their machines and integrate greater intelligence into the cloud which will lead to cheaper robots, quicker change times, and much more flexible production.
“5G is not only about speed and latency, it is also about efficiency. Our 5G networks will enable 10 times lower cost per gigabyte than current 4G networks, thanks to increased spectral efficiency, higher network utilisation, greater user numbers, and higher average speeds,” said Shoukry.
Shoukry added that 5G will give birth to new businesses and fuel new innovations, noting, “we can’t fully grasp today how 5G will change not only the way we communicate, but also the ways we find solutions to create a more sustainable world in the future.”
In an interview with DNE, Shoukry explored the possibilities 5G may bring to the future. The transcript of the exchange is below, lightly edited for clarity.
How long has Ericsson been in Egypt?
Our relationship with Egypt is more than a century old. It began when Ericsson installed its first telephone exchange in Egypt in 1897 in Alexandria.
Together with local partners in Egypt, Ericsson has played a key role in building the country’s ICT infrastructure from 2G to 3G to 4G, and now paving the way towards 5G.
We are working with the country’s operators to help them expand their core network capabilities and develop their legacy infrastructure to address future network requirements related to 5G technologies.
Together with partners and customers, we are working on technology use cases for today and tomorrow. These include network evolution into 5G, new business models with IoT and 5G, and digital engagement for greater efficiency and an enhanced customer experience. We have also focused a lot on innovation this year, including AI/machine intelligence, robots, and AR/VR.
What is the amount of Ericsson’s investment in the Egyptian market?
Globally, Ericsson invested SEK 37.9bn (Swedish kronas) on research and development (R&D) in 2017, and this of course includes investments in the Middle East and Africa region.
There are opportunities for growth in specific areas leading to selective market expansion opportunities that are enabled by increased investments in R&D for technology and cost leadership.
What is Ericsson’s strategy for the coming five years?
Our new CEO joined last year in January, which was when we devised our current strategy to pay greater attention to R&D.
We see that mobility is the fastest growing technology ever. Today, there are almost 8bn mobile subscriptions globally, enabling people around the world to communicate more easily than ever before. With 2G and 3G, we moved from an exclusive service to mass market and reached the first billion mobile subscriptions. With 4G, we entered the era of data, as people started streaming videos and music, posting on social media, and collaborating on the job using mobile broadband connections. It is safe to say that 4G has powered the era of the smartphones. Now, our mission has expanded beyond communications for all; now, it is internet for all. Research shows that on average, a 10% increase of mobile broadband adoption causes a 0.6–2.8% increase in economic growth in a country. Our plan in Egypt and the region is to continue paving the way towards 5G and providing internet to everything that can benefit from connectivity.
What are the new projects that the company is mulling?
Currently, we are working towards a 5G future, and the capabilities of a 5G network will be a sharp change compared to 4G. Not only will 5G data speeds be 10 to 100 times faster than 4G; 5G will also provide much lower latency—down to almost true real time. These capabilities of a 5G network will create many new uses.
Connected things can communicate with each other faster than our bodies will notice, which will revolutionise virtual and augmented reality and make voice the most common way to interact with machines.
Connected vehicles will talk to each other, enabling a future city to operate traffic lights and preventing many auto accidents.
Doctors will be able to perform remote surgery, and sensors will keep miners safe by defining their work area and alerting them to approaching dangers.
5G is not only about speed and latency; it is also about efficiency. Our 5G networks will enable 10 times lower cost per gigabyte than current 4G networks, thanks to increased spectral efficiency, higher network utilisation, greater user numbers, and higher average speeds.
What about the contribution of the Egyptian market to Ericsson’s global business?
We are not at liberty to disclose country-specific figures, but we do report them by region in our quarterly earnings reports. In Q1 2018, the Middle East and Africa region had an impressive contribution of 19% to our global business. We anticipate our operations in the Egyptian market being mutually beneficial in terms of return on investment and economic support.
What are the latest and targeted revenues of the company?
During a challenging 2017, Ericsson developed and started to execute a focused strategy, strengthening its R&D while simultaneously introducing robust measures to reduce cost and commercial risk.
We have now laid the foundation for achieving our financial targets. The fourth quarter aligned well with our overall expectation, with gradual improving performance in networks and continued significant losses in digital services. The result was, however, far below our long-term ambition.
How do you assist the investment climate right now, especially in ICT sector?
While the investment climate in Egypt is improving, it remains challenging, despite the economic reform programme backed by the International Monetary Fund (IMF) in November 2016.
There are large investments in the ICT domain, and there has been immense growth estimated at around 13% over the past 18 months in investment from our customers, ourselves, and our partners. We are working in an ecosystem where we play a role, our customers play a role, and our partners play a role. We have seen a positive correlation between GDP growth and mobile broadband in countries like Egypt, because the more access you have to mobile broadband, the more GDP grows.
Egypt’s information and communications technology (ICT) industry is expected to drive economic growth, according to Oxford Business Group. In fact, the country’s ICT sector grew by 12.5% in the 2016/2017 financial year, contributing some 3.2% to the country’s GDP. As the ICT industry continues to grow, it becomes an attractive sector for both national and international investments.
What are the challenges that face investors right now?
We are investing in an industry that services people, but we were affected by higher inflation rates too, so we faced this cycle of challenges. Nonetheless, the situation is improving.
The industry has invested more into overcoming the challenges, and I think that this year and into next year, things will be much better.
I would like to add that competition is intense in the ICT space, which is healthy for the market.
Since you faced some challenges in the past period, what is the outlook?
This year, we devised a very focused new strategy, we adopted heavy investments in R&D, and we adopted a very methodological way of working with our customers to satisfy their needs, as we always make our customers a priority.
The Middle East and Africa represents about 19% of the entire Ericsson group, which is a very sizable portion. We see that Egypt is a very promising market, with a high percentage of young people in the population, which helps create a good environment for digital solutions. We also have a high service penetration level and people are using more smartphones than ever, so these factors present good business opportunities.
However, there are risks to consider and challenges to overcome as well. The world is currently in the midst of an unparalleled digital revolution, which has translated to an industrial revolution that has shaken up the market and challenged the status quo for investors. However, this transformation works largely in favour of the ICT industry, as business has been booming in recent years and will only continue to grow in the face of immense digital adoption.
Ericsson is continuously investing in the Egyptian market as we are confident in its potential, and we are committed to participate in the country’s growth.
How do you see opportunities in Egypt’s megaprojects?
As the world becomes increasingly dependent on technology and connectivity, there is immense opportunity in projects that affect people on a large and widespread scale. For example, many ICT operators are involved in smart city projects around the world, whereby connectivity becomes the most important resource. Similarly, e-health and e-government initiatives implement data networks and ICT operations in key fundamental ways. Megaprojects like these are becoming more frequent as the world embraces digitalisation—and their success hinges on the capabilities of operators like us.
How many employees does Ericsson hire currently?
New hires depend on business needs. Hiring from within the organisation comes as a priority, and in the event of unavailability or insufficient competence inside the organisation, we seek fresh talent from the external market.
Is Egypt’s office responsible for other countries in the region?
Ericsson’s Egypt office is only responsible for Egypt. This way, we can focus all our resources in that location exclusively on operations in the country.