Ericsson CEO Borje Ekholm warned a decision in Sweden to ban Huawei and ZTE’s 5G equipment could impact its business in China, during an earnings call in which it revealed a rise in Q4 profit on strong sales from its network division.
Ekholm reiterated his vocal stance on the dangers of vendor bans, underlining the need for free competition and global collaboration on standards. Sweden’s decision “may create exposure for our operations in China”, he added.
Fredrik Jejdling, head of Business Area Networks, told Mobile World Live although the ban was yet to result a “material impact” on its business, it was in regular discussions with partners and customers in China.
“Needless to say we are monitoring the situation very closely given the importance of China”.
“We’re working to ensure we live up to obligations and control the pieces we can control in the situation.”
Ericsson won a significant amount of business from China’s operators during 5G tenders, with the company noting the region was “critical” during its Q3 statement.
Away from geopolitics, Ekholm noted the Covid-19 (coronavirus) pandemic had highlighted the need for resilient digital infrastructure, with more counties seeing 5G as a key technology.
“The pandemic has exposed the digital divide and rapid deployment of 5G is a fast way to bridge the divide,” he said, pointing to accelerated deployment efforts in Australia, the Middle East, North East Asia and the US.
Ericsson recorded a 60 per cent year-on-year jump in net profit in Q4 to SEK7.2 billion ($864 million), with revenue up 5 per cent to SEK69.9 billion. The vendor noted it had improved margins across all segments.
Revenue from its networks division increased 20 per cent, credited to improvements across 2020 on its 5G portfolio following SEK10 billion of R&D investments in the years from 2017.
In its Digital Services division, the company noted it planned to begin generating cash from its cloud-native 5G products in the next 12 to 18 months, with deals described as “significant customer contracts” already in place.
Ekholm noted Ericsson was gaining market share from all major competitors across its units.
Looking to 2021, he added there was an expectation of continued business wins in Europe, though noted the pace of 5G rollout in the region continued to lag some other areas.