Ericsson aims to obtain a share of 5G contracts in the Chinese market once local carriers start to deploy the technology, the company’s president and CEO Börje Ekholm said during a conference call with investors.
“Our
estimate is that they will commence rollouts in the later part of the year. It’s
very hard to today see how large those will be. But they will be large compared
to the rest of the world,” the executive said.
“China today has
60% of the number of base stations in 4G of the total global market. So, it
does not matter what pace they decide [for 5G deployments], it would be
significant. We feel that this is an area where we want to participate. We’re
investing in the market to be a participant, to get a share. What we ultimately
will be awarded will, of course, depend on the competitiveness of our offering,
and it’s very hard to judge that today.”
Ericsson posted revenues of SEK 48.9 billion ($5.27 billion) in the first quarter of 2019, an increase of 7% year-on-year.
Net income for
the quarter reached SEK 2.4 billion, compared to a net loss of 725 million in
the year-ago quarter.
“Growth was
mainly driven by North America. Our strategy, to work with lead customers in
lead markets, is generating both 5G business and hands-on experience in 5G
rollout and commercialization. To date we have publicly announced commercial 5G
deals with 18 named operator customers, which, at the moment, is more than any
other vendor,” Ekholm said.
The executive
also said that the development of 5G in Europe is considerably slower compared
to other regions primarily due to lack of spectrum, poor investment climate and
additional uncertainties related to future vendor market access.
“We continue to
take strategic contracts and incur costs for 5G field trials and, in addition,
by end of 2019 we expect large-scale deployments of 5G to commence in parts of
Asia. Combined, this will gradually impact short-term margins but strengthen
our position in the long term,” the executive said.
“The impact of strategic
contracts and 5G field trials was limited in Q1. The 5G market is gaining
momentum and we are well positioned to capture opportunities. We will continue
to make substantial investments in R&D, especially in 5G, automation and
AI. This is a key part of our focused strategy to strengthen our long-term
business and path to reaching our targets for 2020 and 2022,” he added.
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