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5G demand boosts Ericsson networking sales

(Image credit: Ericsson)

Ericsson is increasingly confident about its prospects in the 5G era as demand from operators saw networking sales rise by four per cent in Q2.

Buoyed by investments in Europe, North America and Asia, the Swedish telecoms equipment vendor posted networking revenues of with overall revenues increasing by one per cent to 55.6 billion SEK (£4.9bn).

Despite ongoing uncertainty caused by the coronavirus pandemic, operators around the world are pressing ahead with investments in 5G networks. Ericsson claims to have won 99 commercial contracts, boosted by rollouts in Europe, North America and Asia, contributing to networking revenues of 39.8 billion SEK (£3.5bn). 

Ericsson 5G

Of particular note was the successful pursuit of contracts with all three major Chinese mobile operators. Although China actually delivered a negative contribution to Ericsson’s balance sheet in Q2 due to a 1 billion SEK (£85 million) write down of asset, the world’s largest phone market is hugely important to the firm – and the industry’s – long-term growth.

Strong momentum from network vendors, operators and the Chinese government means the country is expected to be an early 5G leader and offset any potential slowdown in the US and Europe caused by the coronavirus pandemic. As a result, Ericsson has increased its 5G forecast predicting there will be 2.8 billion connections by 2025 – 200 million more than previously estimated.

CEO Borje Ekholm also hopes that governments will place 5G at the centre of their post-Covid 19 economic recovery strategies. The company had previously expressed concerns that government lockdowns and travel restrictions could impact supply and service delivery. Ericsson is also resigned to the fact that a general economic slowdown could result in a pause in investments by operators and that spectrum auctions could be delayed.

“As we prepare to exit the crisis caused by Covid-19, there is a need to restart economies and make strategic, forward looking investments which we suggest must include the future digital infrastructure,” he said.

“We see many regions around the world increasing investments in this space and as a European company we are concerned that Europe will fall behind. As critical national infrastructure, 5G will be a key determinant for long-term competitiveness of the general economy, and act as a stimulant to accelerate economic growth, attract future investments and speed up technology innovation. I believe Europe must prioritize actions to incentivize investments in the digital infrastructure, to include lowering the cost and speeding up the availability of spectrum.”

Ericsson also stands to gain from Huawei’s exclusion from 5G networks in the UK. The firm has already aggressively pursued the North American market, securing contracts and opening manufacturing facilities in the US.