What do you do when you are a 125-year-old telecommunications company that needs a new CEO to pull it out of its recent troubles? Well, going out and hiring one from a lock-maker may be a start. That's what Telefonaktiebolaget lm Ericsson (aka Ericsson) did. On April 8, 2003, Carl-Henric Svanberg took over as the company's President and CEO-the 51-year-old newcomer to the telecommunications industry moved from the world's largest locking solutions provider Assa Abloy. Svanberg was in India recently, part of a familiarisation trip that is taking him around the world, and as some of his answers in the interview below show, he is a fast learner. Besides, as the man himself points out, his is essentially a ''management job'', and he ''has used Ericsson phones all my life'' (the first one was in his car, he jokes, and ''was mobile because the car moved''). The car, incidentally, was a Volvo. ''I am a patriot,'' laughs Svanberg. ''I use only Ericsson phones and drive only Volvo cars.'' And he has his work cut out at the loss-making telecommunications giant, although he says the company should return to profitability ''by autumn''. Svanberg spoke to BT's R. Sukumar. Excerpts:

You've predominantly worked in the security business; how does it feel to move to a telecommunications company?

My first 10 years, I was with abb. Then, I worked for 16 years with a security business. When I started off in ABB, it was very much like Ericsson: We were selling complex systems and equipment to rather few customers, three, four, five per country. And it was (also) a huge global organisation.

I have more of management experience from the security side, from the locks business. There are many similarities in how to run a large global organisation and deal with (diverse) cultures and financial markets. Of course, telecommunications is something new to me.

"Where we can improve is in the operational side—R&D, manufacturing, sales''

It isn't exactly an easy job, given that Ericsson hasn't done very well in the past few years.

Ericsson has been around for 125 years. It has always had a leading position in the world, in telecom. We were in India 100 years ago. And communication is a human need.

The telecom crisis was fuelled by us, operators, the media and everybody else; we became far too optimistic. Therefore, everything was growing too fast. And we were forced into making a correction, especially in Europe where a lot of operators paid a huge amount of (3g) licence fees. So it was more of a kind of a self-generated (crisis). The correction we have had to make is major, but one must see that in light of the very fast growth.

But this industry wide crisis has affected Ericsson more than, say, a competitor like Nokia...

We are 80-85 per cent infrastructure; 20 per cent other businesses. Nokia was 80 per cent handsets and 20 per cent other businesses. The handset business is the positive thing of telecom. Nokia's infrastructure business was equally affected, only, it was only much smaller.

Before you entered into your joint venture with Sony, Ericsson phones had a slightly stodgy image. Do you think that has changed now?

I don't know what stodgy means, but I can guess. This (points to the T610) is the latest phone we introduced, and it is actually the first phone that Sony and Ericsson have produced jointly. The others launched before were coming out of one company, but branded jointly. Fact is, we at Ericsson did misjudge when this market changed from a technology-driven market to a consumer market.

Sony brings camera technology, design technology, and consumer marketing experience. We have mobile telephone technology and relationships with operators.

Of course, some people say, the two have been together for a long time and things haven't started to happen. It was only 18 months ago that we started, and to bring a Japanese company and a Swedish company together... (grins).

This one (point to the phone) is really starting to make an impact on the market. But this is just one, and this industry is about have a frequent number of introductions coming all the time.

You have been CEO for almost three months now. What are your immediate plans to bring the company back to profitability?

First of all, the situation has come much further than everyone really knows. We are a debt free company. We are downsizing from 107,000 (employees) to 47,000, and are passing 60,000 on the way down. We will soon see the end of this. We have been cash-flow positive for the past six months. We have passed the danger point. We have also said that we will show profits sometime during this autumn, before the additional restructuring charge. I think we are actually on pretty good ground.

If you look at how Ericsson has evolved, we have always been excellent at developing leading technologies in telecommunications and we have a great organisation around the world that takes care of our customers. But we can improve the way we work. This is a situation we share with our competitors. When the market is growing fast, you don't do everything in the smartest way, you just work hard to keep pace. Now, in the period of lesser growth, the focus on profitability and performance has come to stay. For that reason, the slower period is an opportunity for us.

Where we can really improve is the operational side. We are making, for example, as many base stations as a car manufacturer does cars in his factory-big volume flow. But we are treating it as projects, in the same way that we treat a big core network. That was the way everybody operated in the 1990s. We did the right thing then. Where we are today, we must be excellent in every part-in our R&D, our sales, our manufacturing.

Your primary priority is obviously to return Ericsson to profitability, but beyond that, what are your other priorities for the company?

Ericsson's position in telecommunications is very strong. And we are in an important area, the infrastructure side. There is no very obvious area that we are missing. On the handset side, we have an asset in Sony Ericsson; that can turn out very well. On the global services side, we have a very large professional organisation. The majority of the added value we provide in the field is services. That includes running the networks. So, in more and more locations around the world, we are running the networks. That is something you will see a lot of (in the future). The problem for the operator is that he has so many challenges upfront with the customer, there's so much he has to deal with, that it becomes less strategic for him to run the network. If we take over and run a network, we can do it more cost efficiently.

What does it mean to India that you are visiting the country within three months of taking over as CEO?

If you look at the world of telecommunications, you can split it into two parts. There are a billion subscribers, but they are mainly in more mature markets where we are rolling out 3g (Third Generation) networks offering more data, more advanced services; actually 12 per cent of our system sales now, is 3g.

At the same time, for China and India-actually India is a good example, it is just at the beginning of rolling out-we have a programme that we call the next billion subscribers. This deals with providing cost efficient solutions so that we can help our operators reach many people, not just a few. India is a major market for us, and could really become a very big one. It is very logical for me to be here.

If someone, five years ago, had suggested that today, China would have 200 million (mobile) subscribers, I don't think many would have believed that.

Today we are looking at a similar situation for India. I don't know who wants to stick his neck out and say India is going to have 100 million subscribers. That will happen sooner than we think.

What exactly does the next billion project entail? Does it mean you will manufacture low-cost equipment so that operators can reduce their costs?

The whole thing. It starts with operators, the network, the handsets. Already, India probably offers the lowest (mobile) tariffs in the world. That means all of us in the chain need to work efficiently and provide cost-efficient solutions.

"India is a major market for us and it is logical for me to be here now"

You visited China recently. Do you think its mobile telephony market there will continue to grow?

Growth will continue. We expect China to take its 3g decisions later this year or early next year.

What is your opinion on 3G? Everyone expected 3G networks to roll out by 2002 and that hasn't happened. And what has, is actually pretty fragmented.

We had this hype in the 1990s and everyone thought everything would fall into place. But then, the situation changed. The operators didn't have the money. Their plans slowed down and became more healthy, more balanced. 3g is such a complex technology that you can't roll it out overnight. It is the matter of several years of trimming and trying and sorting, of operators building networks, and of handsets being available. And it isn't just a question of understanding the technology; it's a question of understanding all the opportunities the user gets. What is that he wants?

The roll outs are more balanced now. We are selling 3g networks all over the world.

People are pushing alternatives to 3G, such as WiFi.

If you really simplify it, 3g is like wireless broadband. It's a way, through your mobile system, to get broadband capabilities, including video and whatever. Wireless LAN (Local Area Network) is just another way of getting into the infrastructure network. One radio base station covers the same area as a 1000 wireless LANs. WE don't see that as a threat. We market our own wireless LANs.

Coming back to yourself, do you feel handicapped by the fact that you do not have a telecommunications background?

I may not come up with a great idea on technology-that takes time-but otherwise, no.

At the back of your mind, does the fact that Ericsson has had several CEOs in the past few years bother you?

If you have a very successful and strong CEO for a while, it becomes difficult for people who come after.

There was one new guy that didn't work. And Kurt Helstrom who came in and worked as CEO-he was at the end of his career; he came in because it was an emergency. It was meant to be a short-term solution. I don't even think about it. For me, this is a life-thing; I am not going to do anything else, as long as I don't lose my job (laughs).