Telecoms equipment maker Nokia Siemens Networks said on Thursday it did not expect fierce competition for telecoms network gear contracts to ease, as rivals continued to slash prices.

"It's still an extremely competitive market, and vendors are not making huge profits," Christian Fredrikson, head of Nokia Siemens Networks Asia Pacific, told Reuters in an interview. "There's price erosion all the time -- it's not easing in any way."

Ericsson, Nokia Siemens and Alcatel-Lucent are the leading players in the telecoms network market, but have been increasingly challenged by Chinese vendors, including Huawei Technologies and ZTE Corp in the last few years.

With aggressive pricing, Huawei took the No. 4 spot in the global telecom network gear market in the January-March quarter, bypassing Nortel Networks and Motorola, according to research firm Dell'Oro.

Ericsson had predicted recently that the market was set to improve and price competition likely to ease.

Fredrikson said Nokia Siemens would not compete on price alone. The company has walked away from several deals in the past as it focused on improving profit margins and cash flow.

"We will use rational behaviour all the time -- that's the only way to play," he added.

About 3.3 billion people globally now are connected through mobile devices or fixed-line, with this figure expected to rise to 5 billion by 2015.

"We are not going to get to that 5 billion, we are not going to get to connecting the villages, if we do not make the business affordable. We need to make affordable business cases below $2 ARPUs," Fredrikson said, referring to average revenue per user levels, a key industry metric. In emerging markets such as India, which are enjoying phenomenal wireless growth, ARPUs are likely to fall further as telecoms operators seek to expand their subscriber bases to the poorer rural areas.

Nokia Siemens started operations in April 2007 as a 50-50 joint venture of top cellphone maker Nokia and German technology group Siemens

In April, the joint venture reported a smaller-than-expected 74 million euro loss for the first quarter, on revenues of 3.4 billion euros.

Source:Reuters