STOCKHOLM (Reuters) – Ericsson, of Sweden, announced second-quarter core earnings below market expectations on Friday, as robust sales of 5G equipment in most regions were offset by a drop in mainland sales. China According to Refinitiv estimates, the company’s quarterly adjusted operating earnings increased to 5.8 billion Swedish crowns (US$669.9 million) from 4.5 billion crowns a year ago, below the mean prediction of 6.01 billion crowns.
Total sales for the telecom equipment producer, which competes with Huawei Technologies Co Ltd of China and Nokia of Finland, dipped to 54.9 billion crowns from 55.6 billion crowns, missing analysts’ expectations of 57.20 billion crowns.
In mainland China, sales fell 2.5 billion crowns.
While the Huawei ban has benefitted both Ericsson and Nokia in various countries, the Swedish company’s earnings in China is projected to suffer as a result of the Chinese company’s exclusion.
According to two sources familiar with the situation, the initial contract allotments for China’s second phase of 5G rollout are scheduled to be revealed by the end of this month.
“It is sensible to predict a considerably lower market share in Mainland China for Networks and Digital Services,” CEO Borje Ekholm said in a statement, “since the earlier decision to exclude Chinese vendors from the Swedish 5G networks may influence market share awards.”
Meanwhile, Nokia is anticipated to win its first 5G radio contracts in China when it announces profits on July 29. China accounts for just under 10% of Ericsson’s revenue. However, Ericsson signed a five-year, $8.3 billion 5G contract with Verizon on Friday, which is the company’s single largest transaction. (One US dollar equals 8.6584 Swedish crowns) (Reporting by Supantha Mukherjee; editing by Niklas Pollard)/n
