Ericsson AB and ZTE Corp. are among phone-equipment makers that will be buffered against the global recession next year by expansion of wireless networks in India and China, according to industry executives.

“Every industry in the world is cutting, but here is one where you are seeing the commitment to see the spending continue,” says Craig Ehrlich, chairman of the GSM Association, which represents more than 700 carriers globally. Capital spending by mobile-phone companies in 2009 won’t decrease from a projected $142 billion this year, he said.

India and China, the world’s fastest-growing markets for wireless-phone services, will probably start third-generation services next year, driving investment in networks from companies including ZTE. The two countries, which have almost 1 billion mobile-phone users combined, will jointly add 160 million in 2009, according to Spanish bank Banco Santander SA.

“China and India are growing very strongly,” Magnus Furustam, a vice president at Stockholm-based Ericsson, said in an interview in Macau, where the GSM Association held its Mobile Asia Congress conference this week. “We are very positive about the evolution of this region.”

Ericsson, the world’s biggest maker of mobile-phone networks, may increase 2009 profit 19 percent to 16.4 billion kronor ($2 million), according to the median of 29 analysts estimates compiled by Bloomberg.

Network Spending

China Mobile Ltd., an Ericsson customer and the world’s biggest phone company by users, will continue to increase network spending in rural areas, Chairman Wang Jianzhou said in Macau. Investment in villages may drive a 31 percent gain in China Mobile’s capital expenditure to a projected 137 billion yuan ($20 billion) this year, the company said in August.

“We are looking forward to a good year in 2009” in China, Carl-Henric Svanberg said in a Bloomberg Television interview last month, highlighting the nation’s plans to roll out high-speed networks across the country.

ZTE this week said it won a 1.33 billion yuan contract from China Telecommunications Corp., parent of China Telecom Corp., to supply wireless phone gear. ZTE last year won a 2.37 billion yuan contract to supply 3G equipment to China Mobile Communications Corp., China Mobile’s parent.

China Telecom will invest at least 80 billion yuan in mobile-phone networks over three years, Chairman Wang Xiaochu said in July. The country’s biggest fixed-line carrier and its parent last month bought mobile-phone assets from China Unicom as part of a government-led reorganization of the telecommunications industry.

Cash Flow

In India, Bharti Airtel Ltd., the nation’s biggest mobile- phone carrier, may start 3G services in the fourth quarter of next year and has sought bids from equipment vendors including Ericsson, Nokia Siemens Networks and Huawei Technologies Co. for building the high-speed network, Manoj Kohli, chief executive officer of Bharti Airtel said in an interview in Macau.

“We see our cash flow, market share, revenue growing at a healthy clip,” Kohli said. “The Indian economy is in good shape.”

India may sign up 75.2 million mobile-phone subscribers next year, while China will probably add 84.8 million, Santander analyst Carlos Javier Trevi o Peinador wrote in an Oct. 29 report.

In September, India gained 10.1 million wireless users, taking its total to 315.3 million, according to data from the country’s telecommunications regulator. China added 8 million that month for a total of 624 million.

Capital spending by India’s mobile-phone carriers next year may be 25 percent to 30 percent lower than the more than 1 trillion rupees KPMG LLP originally estimated, Bangalore-based Romal Shetty, the accounting and audit company’s executive director for Telecommunications, said by phone yesterday.

Source:Bloomberg