Ericsson boosts profits on 5G rollout

Swedish telecoms equipment maker Ericsson today said that the global rollout of 5G mobile networks helped boost its first quarter profits, although an ongoing contract dispute with Samsung hit sales.

Between January and March, Ericsson, a leader in supplying 5G network equipment, booked a net profit of 3.19 billion Swedish kronor (RM1.5 billion), up 48 per cent year-on-year and beating analyst expectations.

At 49.8 billion, revenue was flat compared to the same period last year and slightly short of analysts’ predictions of over 50 billion.

But operating profit (EBIT) climbed 22 per cent to 5.26 billion, the company said in a statement.

“Networks sales grew organically by 15 per cent, despite a decline in IPR (Intellectual Property Rights) licensing revenues,” chief executive Borje Ekholm said in a statement.

The decrease in IPR licence revenues was “mainly related to expired contracts pending renewal and lower volumes with one licensee,” the company said.

In late 2020, Ericsson filed a lawsuit in the United States against South Korean giant Samsung, which it accuses of having violated its contractual commitments concerning patent licences.

Ericsson had already announced that litigation would have a significant effect on its short-term revenues.

The Swedish company warned that its operating profit could be impacted by one to 1.5 billion kronor per quarter from the first quarter of 2021, in particular due to delays in the patent-related revenues.

To date, Ericsson has signed 136 5G commercial contracts with operators around the world, for 85 operational networks, the company told AFP.

It is one of three companies supplying the majority of fifth generation network equipment, alongside China’s Huawei and Finland’s Nokia.