Ericsson worried

The head of Swedish Ericsson Telecom Group AB Kurt Hel-lstroem, warned of a risk that conditions in the mobile telecommunications market will not improve even next year, in an interview recently.

"We don't think the market has become worse, but the downturn has been prolonged. We have to face the possibility that next year doesn't turn upwards," he said in an interview with the Financial Times.

He said this was a "conservative" scenario and that the group is still counting on returning to profit "some time next year" after two years of losses.

But he added that short-term market turmoil should not obscure the long-term growth prospects for the sector.

Operators urgently needed to invest because "the quality of networks is degenerating almost everywhere, and particularly in Western Europe," he said.

He was optimistic about the potential for third-generation services, referring to advanced Internet-access functions, predicting that in 2005 there will be "massive use of 3G."

Hellstroem said Ericsson would use proceeds from its proposed rights issue to strengthen its balance sheet and ensure adequate working capital for when market conditions improve.

"We will cover any losses from savings and cost-cutting," he said.

Hellstroem also said that the company was not planning any big acquisitions.