Ericsson said that the decision by the Post and Telecommunication Authority (PTS) to exclude Chinese vendors’ products from 5G network rollouts in Sweden may negatively impact the company’s business in the Chinese market.
In a financial filing, the Swedish company noted that the “ongoing geopolitical and trade uncertainty from a range of factors may have a material adverse impact on our business, operations, business prospects and consequently on operating results, financial conditions and our ability to meet our targets.”
Ericsson also highlighted that there are uncertainties for the future bilateral trading relationship between China and several countries as a result of restrictions towards Chinese vendors in national 5G networks.
In Sweden, the Post and Telecommunication Authority has made a decision to exclude Chinese vendors’ products from supporting 5G auction.
Ericsson also said that the company risks collateral damages from a weakened Swedish-Chinese relationship as a result of this decision. “There is a risk that the above lead to measures taken by China that are targeted at the economic interests of Sweden and Swedish industry, including those of Ericsson. 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 will in those tenders be allocated a significantly lower market share than its current market share.
“The geopolitical situation can have consequences on the entire industry, with an increased likelihood of further industry split, separation of global value chains and separation of global standards for mobile telecommunications. This overall development has also led to several countries evaluating how to ensure uninterrupted access to telecommunication network infrastructure, for example through promoting disaggregation of the Radio Access Network and support of national communication network infrastructure champions as alternative to the established global vendors such as Ericsson although the timing and extent of this remains unclear,” the vendor added.
Ericsson said that this scenario may have a material and potentially lasting adverse impact on its business, including sales, market share, market access and supply chain and R&D activities.
Last year, the Swedish regulator said that an examination of applications for the 5G auction had been conducted in consultation with the Swedish Armed Forces and the Swedish Security Service, to ensure that the use of radio equipment in these bands does not cause harm to Sweden´s security.
PTS said that new installations and new implementation of central functions for the radio use in the frequency bands must not be carried out with products from Chinese vendors Huawei or ZTE. “If existing infrastructure for central functions is to be used to provide services in the concerned frequency bands, products from Huawei and ZTE must be phased out on January 1 2025 at the latest,” PTS said.
Ericsson has secured contracts with China Mobile, China Telecom and China Unicom. The vendor currently has a market share of around 12% in China.
