5G market growing even faster than most analysts expected: Börje Ekholm, Ericsson

Ericsson recently held its Annual General Meeting. Speaking to investors, Börje Ekholm, CEO, Ericsson said we have not participated in MWC Barcelona. It has postponed all events and exhibitions until the middle of June 2020. It has cancelled all non-business critical travelling. It is encouraging all co-workers to work from home, if possible. Today, over 90% of our employees in Sweden work from home.

The corona crisis clearly demonstrates how important our technology is. Information and communication are vital ingredients when handling a crisis. These need connectivity. The fact that Ericsson's network enables this is something to be proud of. We work closely with our customers so that we may understand their current needs and make sure that they can provide the best possible connectivity.

So far, we have seen no significant business disruption. As several world economies are experiencing incredibly tough times, we assume and plan for the fact that we will be affected, and may need to take necessary measure, if so needed.

At last year's AGM, we spoke about switching on 5G worldwide. This year, we have succeeded. The world's first 5G network was launched using Ericsson technology. The same was true for Europe's first network, being launched together with Swisscom in Switzerland. Today, Ericsson has 86 commercial agreements, and 27 mobile networks operating in four continents. The 5G market is growing even faster than most analysts expected. Ericsson is well equipped to lead the development.

Ericsson's joint services and the delivery organization have decreased by 23,000 employees. We have employed 5,000 people in R&D. Today, every fourth employee works in R&D compared with 17% in 2017. Our strategy is working, and for the first time since 2013, we are growing. Our gross margin increased and the operational margin almost reached the 2020 target one year earlier than expected. Our balance sheet is robust with a net cash position of 34 billion Kronor and a gross cash level of 72 billion kronor by the end of 2019. We feel that we are well equipped to continue delivering on our strategy despite the challenge coronavirus presents. We are preparing for the tough times ahead.

Huge impact of 5G

Today, many technologies are being developed as 'mobile first'. We are right in the middle of a technological switch between 4G and 5G. Now, 5G will have a huge impact. It is ten times faster, has a tenth of the latency, and provides a much higher connection density. New areas of use will emerge for consumers, fully utilizing the 5G qualities. It will transform entire industries. The full potential of 5G is so much more profound. Manufacturing will get automated and logistics optimized. Health services will be altered as they gain access to sensors, and so on. Many new applications will emerge. Most of them will be within areas still unimaginable to us today.

When 4G was launched a decade ago, many questioned the need for it. Once the network was built, a huge amount of innovations were created onto that network platform. This included streaming to a mobile phone, ordering transportation via an app, making payments, mobile phone e-commerce, and so on.

Countries that first built good 4G infrastructure, namely, USA and China, became the world leaders in consumer apps. Now, the 5G race between USA and China is under way. It is all about creating the future ecosystems for new enterprise apps. These apps are something we probably know nothing about today.

Patents position

Ericsson's leading position is reflected in its portfolio of patents. It consists of over 54,000 patents. Patents are a question of both quality and quantity. Independent assessors have concluded that we have a leading share in relevant patents in 5G bodes well for the future.

Ericsson is also seeing our technology and products perform very well in the field, in the operators' networks. We are also launching innovative products, such as our unique technology that dynamically allocates frequency bands between 4G and 5G, depending on the amount of the users. This enables the development of the 5G infrastructure to move much quicker.

2019 was the year we completed the turnaround of Ericsson. At the same time, we watched the 5G market taking off and accelerating. We are well equipped to keep winning in this tough and competitive market. We need to work together to help reduce the risk of spreading the coronavirus, so that the society can eventually return to a more normal state.