When Kurt Hellstrom assumed charge of Telefonaktiebolaget lm Ericsson (Ericsson, for short) in July 1999, his brief was to stem the slide at this 126-year-old Swedish telecom giant. He began well by showing an improvement in profits in 1999's third quarter.

By January 2001, Hellstrom was kicked up as CEO. There couldn't have been a worse time to take over, what with the global telecom industry hitting a major slump, after years of 40-50 per cent growth. By end-2001, Ericsson had notched up a loss as big as its previous year's profit. ''It's never been so bad, for all of us,'' shrugs the 58-year-old Hellstrom, who rides a Harley when he's not leading the mobile internet charge at Ericsson. Last fortnight, Hellstrom was on a whistle-stop tour of India, meeting customers in Delhi and Mumbai, including Bharti and Reliance.

The Ericsson CEO also found time for an exclusive interview with Business Today's Associate Editor Brian Carvalho, in which he articulated his plan of making Ericsson the No 1 player in mobile multimedia products in five years. Excerpts:

Q. Ericsson has forecast that by 2003, mobile internet users will outstrip fixed internet users. On what basis has Ericsson made this prediction?

A. As per our estimates, at the end of 2001, there were 940-950 million mobile subscribers. We expect this figure to go up to 1.6 billion by end-2005. By 2005, the fixed internet base is expected to be around 1.5 billion. So, the figures say it all. Then, look at the Japanese market, where thanks largely to NTT DoCoMo's i-mode system, there were as many as 48 million mobile internet users last year.

Basically, it's going to be technologies behind mobile internet that will fuel its growth, right from GPRS to 3g to Bluetooth to Multimedia Messaging Systems (MMS). GPRS, for instance, ensures that one is always online, and mobile networks are rapidly upgrading to this technology. 3g, with its higher data speeds, and mms can help bring live colour pictures, animations, text, audio and video clips to the mobile.

But what's the big deal about mobile internet? Why will it become so popular?

Mobile internet will mean that you can have your office in your pocket. You can trade online on the stockmarkets without waiting to buy or sell. It's also useful for location-based services. You can search for the best restaurant in the neighbourhood and avoid traffic jams and blocked roads. And with 3g, you will be able to watch live news, films, events, play real-time games, and participate in video conferences with your handset-all in digital quality. It's all about freedom, convenience, and personalised services.

Last fortnight at the cebit tradeshow, we saw some pretty high-profile alliances being worked out in the field of mobile telephony-Microsoft with German mobile operator T-Mobil and Nokia with Real Networks to name two. Are you concerned about these developments, particularly Microsoft's strides in mobile internet?

We will see many such alliances in the days ahead; there's no exclusivity about them. In fact, Ericsson formed a joint venture operation with Microsoft more than two years ago (to build and market mobile e-mail solutions for network operators). I am not too concerned about Microsoft's moves in the mobile internet field, since Microsoft is not too willing to adapt to the mobile world.

What prompted Ericsson to partner with Sony in the handset business?

When we got into the joint venture with Sony (some five months ago), the big shift in telecom, from voice-centric to data-centric applications, had just begun to happen. So we realised that a combination of technologies was needed. Ericsson, with its over 125-year history, has expertise in telecom. But one of our weaknesses is industrial design. We needed to have competence in high-quality audio, video (to build in small cameras) and in providing the consumer touch. That's where Sony makes a good fit, giving us access to games, music, pictures, the entire gamut, allowing us to become not just a mobile phone maker, but also a multimedia communications products company.

When can we expect the results of this joint venture to begin showing?

We have just launched a promotional campaign for the products from the joint venture company (Sony Ericsson Mobile Communications), but these products are basically just a combination of the new Ericsson and Sony handsets. By the year-end, we will be ready to roll out completely new products on a completely new platform.

The global telecom industry has been in the throes of a slowdown for more than a year now. Do you expect the current year to be better than 2001?

The slowdown in telecom began way back in the fourth quarter of 2000, and not post-September 11, 2001 as many believe. Since then, the industry has gone through its toughest phase ever, and everybody has got hurt. In the 90s, all of us were used to 30-40 per cent growth at the least. This sudden decline has hurt very badly, which is reflected in the 600,000 jobs that have been eliminated in this sector.

In the current year, I expect the mobile services market to be flat at best; a decline of up to 10 per cent can't be ruled out. The fixed line networks will decline at a faster rate. But as far as cellular handsets go, I expect a 10 per cent growth this year in volumes, although there will be a decline in value. The volume increase will be fuelled largely by GPRS, which is finally taking off.

Ericsson has also predicted that mobile phone users will outnumber users of fixed lines in the current year. Do you see this happening in India too?

Yes, that must be happening worldwide as we speak, since the average penetration of mobile phones is just 15 per cent. Fixed lines, on the other hand, are nearing saturation.

In India, however, there's huge potential for both fixed line and mobile growth, given that the ratio is 34:6 (fixed: mobile). I don't think India should skip the fixed-line route, as that is important for broadband connectivity. Both should grow in tandem.

Given that China has around 150 million mobile subscribers, and India just some five million, are you disappointed with the slow pace of growth that the Indian market has shown?

Not really. The good news is that there are lesser issues now, and I see the beginning of the hockey stick curve. By 2005-2006, we expect India to have 50-70 million mobile subscribers. Fixed line users by then would be 46-48 million.

Finally, there's been plenty of hype around Bluetooth and its ability to eliminate wires and cables. Do you see Bluetooth living up to its much-talked-about promise?

If there's been hype around Bluetooth, it has for the most part been created by the media. Soon we will have Bluetooth in every mobile device. We have over 200 Bluetooth products in the market at present, including mobile phones, headsets, printers, personal digital assistants, and digital cameras, and our customers include Intel, Samsung, and Philips.