A year of new horizons
Stockholm, March 2003

Even though 2002 was characterised by stagnation and a rather depressed global economy, Teleca managed to strengthen its position in different areas. In this interview with the CEO, Nick Stammers, we will see that Teleca today is ready to outgrow Europe and becoming a leader in its field on a global scale.

Last year was definitely not one of the best for many sectors in industry, particularly telecommunications. What repercussions has this had on Teleca?
“2002 was very exciting. We started off the year at the worst moment of economic recession, just as we were completing our merger with AU-System, which opened up new horizons for Teleca and helped us withstand the pressures resulting from weak local markets. Traditionally, Teleca has always carried out the role of a consulting company. We focused our attention locally on various niches, but also concentrated on sales, on the creation of a solid customer base, and on company growth on a global scale. However, in order to make a success of being present in new markets and applying fees which achieve profit margins, a company has to offer more. AU-System gave us a new understanding of the global market for mobile devices, as well as solutions and specific offers.”

Can you tell us more about Teleca’s offer?
“Perhaps the most important part is Obigo, the software applications framework for mobile devices. The new Obigo brand was presented in February 2003. It has already reached an excellent position in the field and is becoming a standard for mobile device applications. It has demonstrated enormous potential and in 2003 will be sold in 120 million devices which is 35% of the global market for mobile devices.
As well as offering our software, we have an excellent relationship with the main software providers, such as Nokia, whose series 60 platform is going very well, and Symbian, which is becoming the industrial standard for smart phones. Teleca is one of the very first competence centres for the series 60, and is currently the largest Symbian competence centre in the world. Such relationships place Teleca in a unique position and represent important openings in the global market for mobile devices.”

Which markets is Teleca particularly interested in today?
“Above all, we are interested in Asian markets such as Korea, Japan, Taiwan and China, which do not offer easy access to western companies. We believe we have a good chance of success. During the 4th quarter of 2002, we received orders from Asia worth over 8 million dollars, which is extraordinary when you consider that Teleca is a European company based mainly in Sweden, the UK and France. We have recently decided to open up operations in Korea and Japan, and once we are established in these markets we will expand locally, using our traditional role of consultancy.
Notwithstanding our successes, we too have felt the pinch of a worsening global economy, as have competitors and customers alike. We have been forced to make changes to the dimensions of our progress in European markets, and have also had to cut back on our engineers which has been painful but necessary. Part of our success has been due to an immediate response to market changes whilst simultaneously increasing sales capacity. We gained over 200 new customers in 2002, which represents more than 41.5 million EURO in sales. This is further evidence that we know what we are doing when it comes to sales and acquiring new customers, even in a very difficult market.”

How are Teleca’s customers doing in the current economic climate?
“As I said before, many of our customers are having some problems in facing up to a difficult global economy. At the moment, there is an excess of R&D for our customers’ capacity in many of the large companies. We see this as an opportunity. We make our resources available to as many customers as possible, thereby reducing their overall costs and improving efficiency, given that we provide more flexibility in R&D. In 2002 we undertook various important outsourcing agreements, primarily in the field of Telecom Equipment, which has guaranteed us long-term stability and profits. In June, for example, we began to work for Ericsson in France, then in November in Norway, and this business is going very well. I imagine that there won’t be so many outsourcing contracts once the economy starts to pick up, but by that time the demand for R&D will not be so great, whereas that of traditional consulting services will again start to rise.”

What are Teleca’s goals?
“As far as our objectives for the next few years are concerned, the first is definitely to remain at the cutting edge of technology, as we firmly believe that new technology equals new opportunities. Our goal is to become global leader in consultancy for advanced software solutions. Another vitally important factor is to have a faster growth than the market average, and we wish to grow internally as well as through acquisitions made in the local markets. To begin with, we will continue to focus on European markets, although we are thinking about start ups and acquisitions in specific niches, such as the mobile device market in the USA and Asia.”
Our middle-term ambition is to achieve an EBITA margin of at least 15%. We know that this is feasible, because various Teleca companies are achieving it. In 2001 we had an overall Group margin of 15.3%. In other words, we still have the same core objectives we had when we started the company: quality, profitability and growth – in that order.”

Now that you’ve talked to us about your objectives, what can you say about Teleca personnel?
“Of course, as far as our staff are concerned, we think in terms of values rather than objectives. Even though we are a company at the cutting edge of technology, the most important values to us are the old-fashioned ones of integrity, reliability and hard work. We are an open and honest company. We work hard, if we make a mistake we own up to it, we are reliable, and we want our customers to know it. It is great to work for such a company and to be appropriately rewarded for a job well done. We care about the people who work for us, and given that we are involved in interesting projects for interesting customers, our employees have the opportunity to grow professionally and to build their career.