Ericsson sees its profits explode, boosted by 5G

Swedish telecoms equipment maker Ericsson on Friday announced a jump in its profits in 2020, driven by the continued deployment of 5G, and posted solid profitability in the midst of the Covid-19 pandemic.

“The pandemic has rapidly advanced the digitalization of societies (…), we are seeing more and more signs that countries and businesses are seeing 5G as a key access technology”, commented the CEO of the Swedish group Börje Ekholm.

Ericsson, one of the pioneers of 5G, achieved an annual net profit of 17.5 billion crowns (1.7 billion euros), against 2.2 billion a year earlier, a year which had notably been weighed down by a provision.

Over one year, the turnover was, it posted up 2%, to 232 billion, more than what was expected by analysts (229.6 billion expected).

Sales in the North American region, where Ericsson provides about a third of its turnover, grew 5% year on year.

The gross margin (excluding restructuring), the preferred indicator for the equipment manufacturer to measure its profitability, reached 40.6%, an increase of 3.1 points over one year.

The delicate Huawei case

To date, Ericsson has deployed 79 5G networks and signed 127 commercial contracts with operators around the world, says the group. With the Chinese Huawei and the Finnish Nokia, they currently share the majority of the market for fifth generation networks.

Sweden, the birthplace of Ericsson, however announced in October that it would ban new equipment from Huawei and another Chinese group, ZTE, from its new 5G telecoms network as a national security measure, prompting protest from Beijing. It was the second European country to do so explicitly after the United Kingdom.

The restrictive measures targeting Huawei should thus benefit its main Nordic competitors, according to analysts – even if the boss of Ericsson was worried at the beginning of the year of reprisals targeting his activity in China, after the ban of his Chinese competitor .

In the activity report, the CEO once again mentioned Friday “the risk” that the situation “lead to measures taken by China aimed at the economic interests of Sweden and Swedish industry, including those of Ericsson.”

Find it special file 5G of The Free Eco here.

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