Ericsson’s moment has arrived against Huawei

Ericsson’s moment has arrived. The Swedish telecoms equipment maker’s biggest rival — China’s Huawei — has been ejected from 5G networks across the globe. Under government orders carriers are ripping out kit made by Huawei and, in several countries, replacing it with Ericsson’s. Second-quarter results reported yesterday suggest the company is up to the task. Bucking the trend set by most companies in a pandemic-ravaged quarter, the Swedish group lifted sales slightly to SKr55.6 billion (£4.83 billion) compared with a year ago. Operating income was up 3 per cent at SKr3.85 billion… The group has more in its favour than market opportunity. Without Huawei, the market for radio access networks — which connect devices to the core network — is virtually a duopoly for Ericsson and Nokia. Nokia has a new boss but the same morass of legacy issues — plus a wrong bet on the chips driving 5G technology… More importantly, the future of 5G is far from assured. 5G has become a political fight and there is currently scant commercial appeal. Vodafone has called for the UK to can its spectrum auction. Carriers, obliged to spend more to rebuild networks face a lag on recouping costs given limited Internet of Things applications. Ericsson is in a better position than the market it is targeting.