In the autumn of 1908, the telephone station on Rue Gutenberg in Paris burned down. The French PTT needed to replace it quickly. The operator was reluctant to use a French supplier, since it was suspected that the price would be exorbitant. Acting on recommendations, the operator turned to Ericsson with its order. Ericsson was also able to deliver the required equipment quickly.
The customer was satisfied, and Ericsson now had a chance to establish operations in France. To gain a foothold in the market, however, it was necessary to open a production plant.
Said and done. Ericsson's French subsidiary, Société Francaise des Téléphones Ericsson (STE) was established in 1911, and the following year, the company's plant was completed in Colombes, a Paris suburb. STE succeeded from the start in becoming the French PTT's supplier.
The company experienced major difficulties during World War I, however, as a result of shortages of labor and production materials, but after the war, close cooperation with the French PTT continued. STE manufactured telephones and manual switches.
During the years between the wars, the French telephone network was automated. The French operator's choice of switching system was a miscalculation on the part of STE and for Ericsson as a whole, since ITT's system was selected over Ericsson's 500-switch system. The result was that STE in the late 1920s was forced to manufacture ITT's system under license.
By the 1950s, however, ITT's system was regarded as outdated. After many and lengthy studies, France did not choose one new system, but two. ITT was once again given a chance with its new Pentaconta system, but Ericsson's crossbar system was also selected. The fierce competition between the two rivals meant that PTT received high-quality products from its two suppliers.
For STE, the selection of Ericsson was naturally a boost. With respect to technology, the company was once more integrated with Ericsson's switching systems business. Intensive collaboration now began with the parent company, and STE grew rapidly.
STE was listed on the stock exchange in 1966, and four new production plants were built in the 1960s and 1970s. In the 1970s, Ericsson broke ITT's dominance in the company, since the crossbar system by then served 60 percent of France's needs for telephone station equipment.
During the 1970s, the French PTT issued an official request for tender for electronic telephone stations intended to modernize the French telephone network. Ericsson submitted a bid based on the new AXE system, and several of its largest competitors submitted bids based on their most modern systems.
The winning bids were selected in May 1976 by a cabinet meeting. Ericsson's AXE system was chosen as the second system, and since the French wished to retain telecom development within the country, an agreement was reached with Ericsson that the French electronics company Thomson-CSF would take over STE, which would then manufacture AXE under license.
France was the first country outside the Nordic region to select the AXE system, which was extremely important in instilling confidence in the new system among potential customers.
After having installed about 70 AXE stations in France by the mid-1980s, Thomson-CSF introduced a new system of its own design, and AXE sales fell rapidly.
The AXE system received a new start in France in 1987 when Ericsson, with the approval of the French government, began a joint venture with the French electronics company Matra. The new company, Matra Ericsson Telecommunications S A (MET), soon accelerated AXE deliveries. MET became one of the two suppliers of telecom equipment in France. The other was Alcatel.
Matra and Ericsson also began working together in 1987 to develop and market GSM. This partnership was unsuccessful, however, and in 1992, Ericsson supplied a GSM network to France directly.
On January 1, 1998, Ericsson bought out Matra, making MET a wholly owned subsidiary. At that time, MET had a 30-percent market share for fixed networks. By that time, two other Ericsson companies that sold mobile telephones and business networks had also established operations in France.
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