Ericsson CEO: 'We are investing heavily' in China

Ericsson CEO Börje Ekholm wasn’t interested in speculating about what will happen in the market if Huawei is further shunned by telecom service providers, but he’s intent on making sure Ericsson is a player in China’s 5G deployment.

“China will be one of the first markets in the world to deploy 5G,” he said during Friday’s conference call to discuss fourth-quarter earnings. “It's going to be the first to do it on scale and it will most likely be the first with a standalone 5G network.

“We are investing heavily to make sure that we are a technology participant in that evolution of their network,” he said. “It's an important market for us and we continue to be there. We do the field trials needed. We do all the testing needed and our ambition is to continue to do that.”

Earlier in the call, he was asked about the costs it might entail if an operator were to replace Huawei or ZTE for security reasons, and he declined to respond, saying it’s a very speculative question and it has to play out in the markets.

“I can't really say what is going to happen. What I do think though is that we need to work with our customers to help them solve their problem and that's really the communication problem at the end,” he said. “That's what we are going to continue to focus on rather than trying to speculate about the future.”

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He also said it’s important to remember that Ericsson’s hardware has been 5G-enabled since 2015, so to switch over to carrying 5G traffic, it’s a software update.

“When we look at what’s defining what's 4G and what's 5G, it's increasingly blurred line,” he said. “And actually, it's not a relevant metric anymore. So customers actually buy our [solutions] and the reason we win contracts is that they modernize the network and prepare for 5G, but they also need the 4G capacity they get with the modernized network. So it's hard now to say what they’re actually doing in that sense. They're doing both, right? And so for us, that's why we look more as in a way 5G-ready shipments as a more relevant metric and then pretty much all our ERS volume is—since 2015—5G ready.”

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Last week, Ericsson reported that its losses had narrowed during Q4 as it experienced its first full year of organic sales growth since 2013. Ekholm said that as the industry moves toward 5G and internet of things, Ericsson will take the next step, “focusing on profitable growth in a selective and disciplined way.”