Ericsson wins breakthrough TV broadcast deal

Dylan Bushell-Embling
18 Nov 2009

Ericsson has won a breakthrough deal to run the day-to-day transmission operations of the Nordic region's TV4 group.

The vendor will be responsible for the transmission operations – known as playout services – for TV4's broadcasting network of 11 channels, 25 local TV stations and 16 pay TV channels.

It is Ericsson’s first major managed services deal with a broadcaster and marks the start of a concerted push into the sector by the world’s largest telecom equipment supplier.

“This is a strategic step for us as we see telecom, media and internet converge,” said Ericsson spokesperson Mikael Bäckström.

Ericsson in 2007 signed a smaller, unpublicized contract to provide playout services for the Canal+ group in northern Europe. Canal+ was acquired by TV4 in 2008.

The move is one more sign of the growing importance of services to telecom vendors in the face of declining margins on equipment sales.

The most prominent example this year was Ericsson's July signing of a seven-year, $5 billion network outsourcing deal with US fixed and wireless operator Sprint.

Professional services accounted for 12.8 billion kronor ($1.86 billion) - around 28% - of Ericsson's revenue last quarter. Managed services contributed 3.6 billion kronor to this total.

Professional service sales grew by 9% year-on-year during the period, even while network equipment sales slumped 8%.

Ericsson and TV4 will establish a joint technology and business development forum. As part of the agreement, 40 TV4 employees will be transferred to Ericsson.

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