Towards excellence. Tesla's 4500 kv transformator
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1 Towards excellence Tesla's 4500 kv transformator
2 TRENDS AND EVENTS Electric discharge THE BROAD RESPONSIBILITIES which Ericsson Nikola Tesla obtained within the Ericsson corporation and higher business volume achieved in domestic and export markets resulted in the full utilization of its existing workforce and also required new employment, especially in the research and development area. In 2005 the number of employees rose by 17 percent compared to WE HAVE CONTINUED OUR COLLABORATION with T-HT, our longtime business partner, in the field of fixed telephony and services, especially in the domain of IP systems and broadband access (ADSL). THE MOBILE OPERATOR Vipnet and Ericsson Nikola Tesla put the first commercial UMTS network in Croatia into operation on January 18, The 3G services coverage is 25 percent of the population in the Republic of Croatia. Tele2, THE THIRD MOBILE OPERATOR in Croatia, and Ericsson Nikola Tesla have signed an agreement for the equipment and total communication solutions delivery for a GSM network in Croatia. ENTERPRISE SYSTEMS ACHIEVED a considerable sales growth which can be partly attributed to a significant contract with Croatian Railways for the modernization and extension of their business communication network. IN THE COMMONWEALTH OF INDEPENDENT STATES, CIS, the company once again performed well. Significant business agreements were signed in Belarus with the operator JV MDC Velcom. In Kazakhstan the company concluded its best single business agreement ever (worth 39 million EUR) with a new customer, TelecomNet. IN BOSNIA AND HERZEGOVINA Ericsson Nikola Tesla signed agreements in the field of mobile and fixed telephony with its longtime business partners Eronet from Mostar and BH Telecom from Sarajevo and also with the operator Telekom Srpska. IN MONTENEGRO Ericsson Nikola Tesla signed an agreement with Monet, the mobile network operator, for upgrading their GSM network. IN OUR RESEARCH AND DEVELOPMENT unit the Integration and Verification Center was successfully implemented and the Service Layer Development Center organized. THE GLOBAL SERVICE DELIVERY CENTER obtained new responsibilities in the field of consulting related to the design and optimization of communication networks, and the Global Mobile Solution Center opened as well. THE FIRE IN THE JANKOMIR warehouse of September 10, 2005 was a major incident in the company s history and for Ericsson globally. The crisis management team took steps to ensure that business processes would be undisturbed. The damage compensation procedure was initiated and insurance coverage will compensate the losses. IN TUNE WITH THE INTERNATIONAL trend Ericsson Nikola Tesla adopted the corporate governance principles. AN ERICSSON NIKOLA TESLA CLOSED voluntary pension fund was established with the Raiffeisen Pension Fund Management Company. The company is among the first in Croatia to organize such a fund for its employees. 22 Annual Report 2005
3 BUSINESS ACTIVITIES Since it is a part of the Ericsson corporation and global telecommunications, Ericsson Nikola Tesla is directed towards cutting-edge communication solutions. Over the last ten years the company has gained status as a «brainware» provider. The company s core business includes: Marketing and sales in Croatia, within the Ericsson corporation and in dozens of export markets in Central and Eastern Europe, Middle East and Africa Research and development Design of total communication solutions and services System integration PRODUCTS AND SERVICES Ericsson Nikola Tesla ensures to its customers the entire Ericsson portfolio of communication products, solutions and services: Broad range of products for both existing and new operators, Internet services providers (ISP) as well as enterprise systems Consulting, implementation, system integration, management and support services Information systems and application solutions for e-health Special systems POSITION IN CROATIA Ericsson Nikola Tesla positioned itself as a company that: Contributes to national prosperity by providing modern communication systems and technologies Creates worthy and appealing telecommunications business deals Is one of the major knowledge exporters Employs and retains young and talented specialists Plays an active role in e-croatia projects Initiates and leads positive social and economic changes being fully aware of its social responsibility POSITION WITHIN THE ERICSSON CORPORATION Due to the competence and skill of its specialists, its work method and management style Ericsson Nikola Tesla has been distinguished as a: Marketing and sales network Strong research and development unit Regional center for total communication solutions Regional and global service delivery center Leader in e-systems The two-phase induction motor Ericsson Nikola Tesla 23
4 SALES AND MARKETING Ericsson Nikola Tesla conducts business in three strategic market groups: Croatia (its domestic market) Export markets The internal Ericsson market These are the three cornerstones of our marketing and sales organization. Sales results The domestic market - Sales revenues increased by 25 percent. Tele2, the third mobile operator in Croatia became a new business partner for Ericsson Nikola Tesla. In its operations with the other two operators (T-HT and Vipnet) a modest increase in sales revenues was recorded. Ericsson Nikola Tesla supports the modernization of their networks by providing sophisticated telecommunication solutions and services to domestic users. As far as enterprise systems are concerned, 2005 was the most successful year ever. Export markets - The company achieved success in Kazakhstan with a new business model that ensures new gain as well as new competence and skills for the future. A 39 million EUR contract with TelecomNet includes modern solutions relating to customer financing. Experience gained with this contract can be applied in future business deals in other markets. This success story continued in Belarus where sales volume increased, compared to In Russia, however, there was a considerable drop in sales due to the fact that our large customer, Svyazinvest, decided to reduce investments in fixed telephony by as much as 50 percent, compared to For this reason the sales revenues in export markets dropped by 10 percent. The induction AC motor detail 24 Annual Report 2005
5 Ericsson Nikola Tesla obtained broader responsibilities within the Ericsson corporation in the research and development area, as well as within the Global Service Delivery Center Internal Ericsson market Due to its continual outstanding performance over a number of years Ericsson Nikola Tesla obtained broader responsibilities within the Ericsson corporation in the research and development area, as well as within the Global Service Delivery Center. Accordingly, the company had to invest in its workforce, competence development, workplaces and equipment. New employment rose by 17 percent, investment in fixed assets amounted to 108 MHRK. This resulted in sales growth in the internal Ericsson market of 31 percent during Operations review The product mix has changed since 2004, with mobile business going from 30 to 40 percent of total sales and services (both mobile and fixed) increasing from 35 to 42 percent of total sales. Services will be a key area in future business. In fixed telephony there was an expected drop in business volume (e.g. the Russian operator Svyazinvest). The expected growth of demands for broadband access to the Internet should provide good business opportunities and challenges in both fixed and mobile telephony. Compared to 2004 margin levels were somewhat lower. We expect that growing competition will lead to further pressure on margins. Competitors from China are entering markets while using low prices so that cost efficiency will play an important role in protecting our margins. Sales revenues went up by 5 percent compared to 2004 and this was accomplished through higher volume sales of products and services. Tesla's inventions applied: Radio Zagreb's first transmitter Ericsson Nikola Tesla 25
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