Ericsson’s Q4 results have beaten expectations, with demand for its 5G kit increasing quarterly revenues by 13% to SEK 69.6 billion (£6bn).
Networking sales rose by 20% in the quarter, while margins have increased to 43.5% from 41.1%, improving the profitability of the business.
Along with Huawei and Nokia, Ericsson is one of the ‘big three’ telecoms equipment manufacturers, offering radio, core and other networking technologies to mobile operators. It has invested significant resources into the development of its 5G portfolio and is reaping the benefits.
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Ericsson 5G in Q4
The Swedish firm has more than 100 5G customers around the world and has been one of the main beneficiaries of Huawei’s exclusion from several markets - especially the US where it has opened new sales and manufacturing facilities.
5G rollouts have continued despite ongoing challenges related to the Coronavirus pandemic and could even lead to lower than usual seasonal downturn in Q1 2021. By 2026, Ericsson says four in ten mobile connections will be 5G, equivalent to 3.5 billion, and will account for more than half of all mobile data globally.
“As we navigate through the pandemic, health and well-being of our colleagues, customers and partners is our number one priority,” said Ericsson CEO Börje Ekholm. “Despite the challenges, our people continued to deliver and to serve our customers with very limited disturbances.”
“The pandemic has fast forwarded the digitalization of societies, including remote working, by months if not years. A resilient digital infrastructure is critical. We see more signs that countries and enterprises see 5G as a key access technology, with increasing deployment speed in Australia, the Middle East, North East Asia and the US. The pandemic has exposed the digital divide and rapid deployment of 5G is a fast way to bridge the divide.”
However Ekholm also warned of possible retaliation from the Chinese government due to the Sweden’s decision to ban Huawei from its 5G rollout. Ericsson has won lucrative contracts with China’s three main mobile operators and has campaigned for regulators to reverse the decision. It told investors that any reaction from Beijing could have consequences.
“The Swedish telecom regulator’s decision to exclude Chinese vendors from 5G networks may create exposure for our operations in China,” he added. “Our business in 180 markets today has been built on free trade and open, competitive markets. This has also ensured the development of a single global standard for mobile communication. It is critical that responses to the geopolitical situation safeguard the extraordinary value associated with those operating standards for 5G and beyond.”
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