Ericsson Faces Loss of China Market Share
Ericsson warned it will face a higher risk of taking lower market share in China than it currently holds. The company reiterated concerns about Sweden’s decision to exclude vendors Huawei and ZTE from 5G rollouts.
Once again Ericsson addressed the China-Sweden issue in an updated prospectus for investors related to Ericsson’s issue of a €500 million unsecured eight year bond. In its statement, the company reiterated concerns raised in its Q4 2020 financial report, which stated Swedish regulator PTS decision to exclude Chinese vendor products from domestic networks may adversely impact the economic interests of the nation and its industries, including those of Ericsson.
Ericsson noted being headquartered in Sweden meant the PTS decision would have special relevance and there was a risk China would retaliate. “While Ericsson is invited to various ongoing tender processes in China, the final outcome remains uncertain and it is the company’s current assessment that the risk has increased that Ericsson in those tenders be allocated significantly lower market share than its current market share,” the company explained.
Ericsson continues to state the geopolitical situation could have consequences on the entire industry, with increased likelihood of further splits, and separation of global value chains and global standards for mobile telecoms. A harder stance by governments on certain vendors had also led to several countries looking at how to ensure uninterrupted access of network infrastructure, for example through promoting disaggregation of the RAN, in addition to supporting national companies as alternatives to global vendors. Ericsson added that all this may have material and lasting adverse impact on their business.