In the first five months of 2004, especially in April and May, Ericsson Nikola Tesla, the Croatia-based leading supplier of cutting edge (modern) communication solutions, services and equipment in the region, that recently established themselves as the high-quality integrator of information – communication systems in the region, signed a series of significant contracts in the domestic and export markets.

We were most effective in the markets of the neighboring countries – Bosnia and Herzegovina and Montenegro. To book 85 million HRK in one month only in these countries extending over only 65 thousand square kilometers and having some 3,5 million inhabitants was quite an achievement (accomplishment) by Ericsson Nikola Tesla in April this year.

In January Ericsson Nikola Tesla signed a contract with BH Telecom for the integration of CAMEL ph2 function into the BH Telecom network and this assignment was finished late in March. Early in April the successful cooperation between Ericsson Nikola Tesla and BH Telecom was confirmed with another contract for the delivery and commissioning of the newest exchange AXE HW 810 with the latest software revision Enabler 1.0. Immediately after this part of the project is finished the software revision shall be installed in the remaining exchanges in the network, i.e. the upgrading shall be performed from Local 7.2 into Enabler 1.0 in the AXW HW 501 technology. With this project realized BH Telecom will be the first fixed network operator in the region to meet the requirements of the regulation agencies for liberalization and deregulation of the telecommunication market in terms of functionality as declared by CCITT (now ITU -T) standards and recommendations. In April Ericsson Nikola Tesla concluded a contract with BH Telecom for the extension of the existing base station controller and for the implementation and integration of a new controller that shall permit further extension of the GSM network of BH Telecom. Also the delivery and implementation of 62 new base stations together with corresponding transmission equipment were contracted. The preparations were carefully carried out, specialists are in the field and we expect that these contracts will be carried out on time and to mutual satisfaction of both partners in this business.

In Montenegro the GSM operator Monet is building their mobile network in close cooperation with Ericsson Nikola Tesla. During the year the trial operation of GPRS system was finished successfully and owing to the dedicated work and collaboration with the experts of the investor satisfactory results were achieved in all areas. The final step in the project was the delivery of Ericsson's GPRS system to the customer in Montenegro. A further step to a closer interconnection between Monet and Ericsson Nikola Tesla was taken on April 26 with the signature of a contract for the upgrading of Monet's system and for the network extension with several base stations, which shall provide a larger network capacity and better coverage for the operator. Within this contract a new Multimedia Messaging Center shall be implemented in Monet's network. This confirms the status of Ericsson Nikola Tesla as Monet's exclusive supplier of mobile equipment and services.

After two years of negotiation between Ericsson Nikola Tesla and Hrvatski Telekom in which period various alternatives of the modernization of the HT network were analyzed, a solution was adopted that in addition to further network optimization, utilization, additions to and relocation of existing equipment permits optimum transition to a higher application level. In May this year (2004), pursuant to such strategic agreement with Hrvatski Telekom, a contract was signed for the upgrading of the local level of AXE network and intelligent network node into the Enabler application. After the network is upgraded, HT will be able to offer new services for customers, also the services that HT shall be obliged to secure due to the regulation in the fixed telephony market. With the upgrading the openness of the network for the acceptance of subscriber stages will be secured.

Ericsson Nikola Tesla continuously achieves excellent results in the markets of the Community of Independent Countries, CIS. One of them is the contract concluded with the Svyazinvest Southern Telecommunication Company with their headquarters in Krasnodar. The sales unit of Ericsson Nikola Tesla responsible for CIS markets makes efforts to conclude not sales but partnership agreements with this customer that should be useful for both parties. This resulted in another significant contract for the delivery of AXE exchanges to the value of 5 million USD. When this business is realized the total number of AXE subscribers of the Svyazinvest Southern Telecommunication Company will increase to some 350.000, and also the number of AXE exchanges owned by this operator will increase. Consequently the Company and independent operators in Krasnodar will soon have at their disposal one transit, three combined and ten local AXE exchanges. The Svyazinvest Southern Telecommunication Company covers the southern territory of the Russian Federation inhabited by more than 20 million people and is among the most prosperous local companies in the Svjayzinvest group. The strong development of telecommunications in the last couple of years in the south of the Russian Federation would have been impossible without the participation of Ericsson Nikola Tesla.