Ahead of the 3G Rush

Tentatively the company will be named “LG Nortel Company,” but this is a preliminary decision.

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By  Tawanda Chihota Published  August 7, 2005

|~||~||~|In February this year, South Korean consumer electronics giant LG entered into a joint venture with Canadian telecoms vendor Nortel Networks aimed at establishing a telecoms company with a core competence in 3G technology. The final details of the deal are in the process of being confirmed, and CommsMEA spoke with Mun Hwa Park, president and CEO of LG’s Mobile Communications Company about the new company’s formation and plans for the Middle East.

CommsMEA: In February, LG and Nortel said they expected the process to create this joint venture would close in 2Q05. How is that timetable looking?
Mun Hwa Park: LG and Nortel signed the MoU to establish a specialised telecoms joint venture company in January. Right now both sides are undertaking the necessary steps to have the company up and running towards the second half of this year. Tentatively the company will be named “LG Nortel Company”. But this is a preliminary decision. The top management is being put together right now and we are currently not in a position to announce exact names. But I assure you that early in the second half of the year the details about the final company name, senior executives and board of directors will be released.

CMEA: The joint venture will focus on the development of WCDMA networks. Is this exclusively the area in which the venture will operate?
MHP: The joint venture company will focus on 3G/WCDMA, 3.5G/HSDPA and the next generation mobile network business. Based on the distinct strengths of both the companies in the CDMA and GSM technologies, the new company will benefit from the synergies and compete in Korea as well as globally. We are going to push for growth aggressively through this new company.

CMEA: With the limited number of WCDMA deployments in the Middle East, how relevant does LG believe this joint venture to be to the region at this time?
MHP: The Middle East has limited exposure to CDMA and it will take a while for 3G technology to catch on here. 3G technology is in its infancy in this region. But as you know, LG is number one in the field of 3G, so it is our firm belief that this new joint venture company will be in a position to play it’s role in the 3G arena by supplying superior 3G solution and services in the Middle East.
||**|||~|Park200.jpg|~|Mun Hwa Park, president and CEO of LG's Mobile Communications Company.|~|CMEA: What is LG's presence in the Middle East telecoms sector at this stage?
MHP: Well, LG is a newcomer to the Middle East’s GSM dominated market. Our sales volume in 2003 was around US$147 million. In 2004 we grew by around 9% to record sales volume of US$160 million. Last year we had around 6% of mobile phone market share. But this year is extremely important for LG as we plan to push our presence strongly in this market. We expect to grow significantly in the market due to our well-established brand awareness and aggressive marketing and investments in infrastructure in the region. The results so far are very encouraging and we have already seen significant growth in various markets this year.

CMEA: So does LG expect this venture to have a direct impact on its handset business?
MHP: LG expects synergies in mobile phone handsets as well as the system infrastructure business. At present there are some synergies in CDMA only but as a result of this alliance the new company will be expected to aggressively target the GSM area. It is a bit premature to comment on what that might include or exclude.

CMEA: There are a number of Asian telecoms vendors that LG could have allied with. Why was a vendor from the other side of the world chosen?
MHP: LG is the most advanced company and practically number one in the CDMA segment. Nortel is viewed widely to be among the market leaders in the CDMA and GSM system network business. Nortel has great influence on global CDMA and GSM infrastructure, and the reason for this alliance is to create a major player, in fact the world’s best company, in handset and telecoms infrastructure globally.

CMEA: In March, LG and Nortel announced the completion of live test calls using a commercial handset solution for HSDPA. Was this trial held under the joint venture agreement?
MHP: In March, LG’s handset development laboratory and Nortel’s French laboratory collaborated to test a unique combination of Nortel’s WCDMA technology with LG’s dedicated HSDPA handset. Using this combination the download speed of 14Mbps became a reality. This is the first time that it has been possible to achieve this feat under normal circumstances. This event has demonstrated that it is a verifiable and commercially viable technology and a true successor to 3G technology. I believe that between 2H05 and 2H06, the U.S., Korea and some countries in Europe will start using HSDPA. There will physically be 3.5G available in these markets. So, LG is well poised to play a leading role for HSDPA service network and handsets.

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