Ericsson: 5G a 'commercial reality' as networks sales rise

Ericsson has reported net sales of 54 billion SEK for Q3, up from 49 billion SEK last year.
Written by Corinne Reichert, Contributor on

5G is now a "commercial reality", Ericsson has said in its Q3 earnings report, with the Swedish networking giant planning to "continue to invest to secure 5G leadership" with enhanced mobile broadband and fixed-wireless as the first use cases.

Ericsson is also looking towards artificial intelligence (AI) and automation to push its business, as the company reported 54 billion Swedish kronor (SEK) (almost $6 billion) in net sales for the third quarter, up from 49 billion SEK in the same quarter last year.

Cost of sales for the quarter was 34 billion SEK, down from 36 billion SEK this time last year, while research and development (R&D) expenses were down from 10.5 billion SEK to 9.4 billion SEK. Opex was 16 billion SEK, down from 17 billion SEK.

Total net income for the quarter was 2.6 billion SEK, an improvement on the 3.5 billion SEK loss this time last year, with net sales in its Networks division up by 13 percent year on year to 35.9 billion SEK.

Across Networks, products were up by 17 percent to 25 billion SEK and services rose by 5 percent to 10.6 billion SEK. According to Ericsson, it has seen strong growth in North America, and growth in Europe and Latin America, with the quarterly increase "driven by software and capacity sales".

It is also seeing payoff from its increased investment in networks R&D, the networking giant said.

Digital Services brought in 9 billion SEK in net sales, up by just 1 percent from 8.93 billion SEK last year as services rose by 8 percent but products fell by 6 percent. Ericsson cited a "major contract" in North East Asia that has been further delayed as the cause.

Ericsson's Managed Services business clocked 6.4b SEK in net sales, down 2 percent from 6.6 billion SEK last year due to "contract exits"; while Emerging Business and other made 2.4 billion SEK, jumping by 22 percent year on year, driven by a number portability contract in the US.

In the year to date, Ericsson has made 97 billion SEK from Networks; 25 billion SEK from Digital Services; 19 billion SEK from Managed Services; and 6 billion SEK from Emerging Business and other.

In unveiling its first-half results in July, Ericsson had announced net sales of 93 billion SEK ($10.5 billion), down from 98 billion SEK a year ago, as CEO Börje Ekholm pointed to a future in capturing 5G business.

"Customers turn to new technology in order to manage growing demand for data with sustained quality and without increasing costs. This, together with fixed-wireless access, represent the first business cases for 5G. We will continue to invest in securing leadership in 5G," Ekholm said in July.

"This includes further investments in R&D, to solidify our complete 5G portfolio, and investments in field trials. We also intend to selectively capture new business opportunities through our 5G-ready 4G portfolio to extend our footprint as operators prepare for 5G. We provide solutions for all frequency bands for 5G, which strengthens our global competitiveness."

Ericsson had raised $370 million in December to support its 5G, mobile, and Internet of Things (IoT) R&D activities.

Last month, Ericsson then announced adding three new products to its 5G hardware and software portfolio, including spectrum sharing between 4G and 5G bands, street macro transport solutions across millimetre-wave (mmWave) deployments, and radio access network (RAN) compute.

The Ericsson Spectrum Sharing software will support 4G and 5G simultaneously through the same spectrum band when using any Ericsson Radio System since 2015 via a remote software installation, the company said.

"This capability will allow communication service providers to deliver nationwide 5G coverage with a much more flexible spectrum migration strategy -- removing the need for dedicating existing 4G spectrum assets to 5G statically, which would negatively impact 4G performance," Ericsson explained.

The networking giant's new Street Macro radios then make it easier to increase capacity in urban areas across mmWave spectrum bands.

Lastly, the RAN Compute portfolio will enable the easy distribution of RAN functions including beam forming and radio control, Ericsson said, and includes all current basebands as well as four new products that increase the capacity of current basebands by up to threefold.

All three 5G solutions will launch commercially in the second half of 2019, and follow Ericsson unveiling a complete commercial 5G software set across radio and core networks in February.

All Ericsson Radio System products will be backwards compatible with 5G NR capabilities thanks to remote software installation, including legacy radios dating back to 2015, dot system products, and micro radios. Such products have been deployed in over 190 networks globally, Ericsson said at the time.

In the past month, Ericsson has signed a $3.5 billion deal with T-Mobile to help roll out its 5G network across the US; and made the first 3GPP-compliant 5G mmWave over-the-air call using a smartphone form-factor mobile device in partnership with Qualcomm.

It also announced a 5G partnership with Juniper Networks, an IoT partnership with Sprint, the acquisition of US service assurance technology company Cenx, and the completion of a 5G call with Swisscom in Switzerland.

Ericsson also announced making a 5G data call across a commercial mobile network in partnership with Telstra and Intel in June, using its commercial 5G NR radio 6488, baseband, and packet core across 3.5GHz spectrum, and launched a 5G software development centre in the US in August.

It also recently launched a 5G innovation lab in India, saying it will encourage collaboration on 5G technologies and applications between telecommunications carriers, industry, startups, and academia; signed a partnership to fit out Audi's car factories with 5G connectivity; and is helping Singtel launch its 5G trial network at the end of 2018.

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