Ericsson pointed to an organic sales uplift of 10 per cent during Q1 2021, primarily driven by growth of its Networks unit, as CEO Borje Ekholm argued the company was well positioned to take advantage of continued 5G market momentum throughout 2021.
The Swedish vendor stated sales for comparable units and currency grew 10 per cent year-on-year to SEK49.8 billion ($5.9 billion), with net income rising 39 per cent to SEK3.2 billion. On a constant currency basis, the sales figure was flat.
Ericsson explained it achieved organic growth despite a SEK1.6 billion hit to licensing revenue related to a patent fight with Samsung, as four out of five business areas made double-digit gains.
Network sales grew 15 per cent to SEK36.3 billion, with “high activity levels” in all regions except Middle East and Africa, as the company continued to grow market share with strong 5G order intake.
Digital Services sales grew 3 per cent, to SEK6.9 billion, driven by packet core sales in Europe and North America. Managed Services revenue fell 8 per cent to SEK4.9 billion, mainly due to lower variable sales in US contracts following the merger of T-Mobile US and Sprint.
Revenue from the Emerging Business and Other segment grew 9 per cent to SEK1.7 billion.
R&D costs amounted to SEK9.6 billion compared with SEK9.1 billion in Q1 2020, with an acquisition of Cradlepoint increasing outlay in its Emerging Business and Other unit.
Ericsson also noted it had taken “proactive and continuous measures” around supply chain resilience and had been able to manage a global semiconductor shortage without an impact to customer deliveries.
Five year strategy
Fredrik Jejdling, EVP and head of Business Area Networks, told Mobile World Live Ericsson was happy with the quarter, which bolstered a five-year strategy to focus on R&D to drive its performance and develop “competitive” products.
Looking ahead, Jejdling echoed Ekholm’s belief the overall market would develop favourably in 2021, highlighting the potential of mid-band deployments in key markets across Northeast Asia as a major growth driver. He said Ericsson would look to deploy critical infrastructure and a standalone 5G dual-mode core, “enabling use cases beyond what we can see today”.
He expects similar developments in North America following a recent C-Band auction in the US, with mid-band complementing high-band in the region.
“There will be large mid-band development enabling us to build the critical infrastructure for mobile broadband, but also for the ICT environment where there is a higher growth rate and where 5G can make a significant impact,” he said.Subscribe to our daily newsletter Back