Ericsson CEO warns of Europe’s 5G lag behind U.S., China

Referencing the 5G progress being made in the U.S. and China, Ericsson President and CEO Börje Ekholm reiterated during an online shareholder meeting on Friday that European countries need to speed up their 5G deployments.

In fact, he said it’s one of today’s most important political issues. He continues to worry about developments in Europe, where networks were about two to three years behind in 4G.

It’s not the first time he’s warned of Europe’s lack of leadership in 5G. However, “we are falling further and further behind China and the USA,” he said.

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Europe eventually will be able to use these new applications, but these applications will be created where the networks exist first. “Thus, future job creation is on the line,” he said. “Today, we see very few digital champions in Europe. They are in the USA and China.”

It’s critical that European countries don’t repeat the same mistakes that were made in 4G, but find a way to speed up the deployment of 5G, he said.

Most of the speech was upbeat about the Swedish vendor's leadership in the 5G world. He talked about Ericsson’s progress in meeting its financial targets, a strategy that many considered unrealistic when launched in 2017.

“Instead of slimming down on R&D, we increased our investments to strengthen our technology position,” he said. “Today, Ericsson’s position is strong, and we are a leader in 5G.”

The CEO, who was not able to be in person in Stockholm, invited Peter Nyquist, Investor Relations vice president, over the video stream to show the new Air 6419, a Massive MIMO radio product. Nyquist lifted it over his head to show how light it is – weighing only 20 kilograms, a weight reduction of 45% compared with the prior generation. It’s also more energy efficient, providing a 20% improvement – something enabled by Ericsson’s own silicon development.

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For the full year 2020, Ericsson reported organic topline growth of 5.1%, a gross margin of 40.3% and operating margin of 12.0%. Its free cash flow before M&A amounted to SEK 22.3 billion, which was the strongest free cash flow in the company’s history.

5G contracts amid pandemic  

Ericsson announced 44 5G contracts in 2020 and closed the year with 122 commercial agreements and 79 live 5G networks globally. Ericsson’s cellular patent portfolio now includes more than 57,000 granted patents.

Ekholm pointed to the acquisition of Cradlepoint, a U.S.-based company, as an example where Ericsson made critical inroads in the enterprise market in 2020. Through Cradlepoint’s solutions, companies can connect sites, vehicles, mobile workforces and IoT devices using cellular technology.

“Cradlepoint is a win-win for our customers since its solutions create new revenue streams for the mobile operators,” Ekholm stated.

Ekholm noted that more than 85,000 Ericsson employees have worked from home during the pandemic and most of the approximately 10,000 new employees recruited last year have yet to physically meet their boss or team.

Ericsson said earlier this month that it will not be physically participating in this summer’s Mobile World Congress trade show in Barcelona due to Covid.