Ericsson announced write-downs of approximately SEK 1 billion (~US$109 million) related to pre-commercial product inventory for the Chinese market. The cost will be reported in segment Networks, impacting gross margin.
While the company reiterated its recent 5G contract wins with all 3 major Chinese operators, it said the deployment of 5G in China will continue to be dilutive to gross margins of its Segment Networks business in the short-term. Ericsson expects the 5G market in China will contribute positively to gross and operating income from the second half of 2020.
Ericsson is maintaining its financial targets for 2020 and 2022.
Ericsson confirms its 5G contracts with China Telecom and China Unicom
Ericsson confirmed that it will supply 5G solutions to China Telecom and China Unicom. This includes the Ericsson Radio System products, as well as Ericsson Spectrum Sharing solutions.
Ericsson said it will provide outdoor and indoor site solutions to build capacity and coverage in the 3.5GHz and 2.1GHz bands. Network services including provisioning, installation and testing will be provided to meet the CSPs’ technical needs and enable them to build and share 5G networks. The Ericsson Radio System product portfolio will facilitate the CSPs’ Standalone (SA) 5G RAN build. 3.5GHz and 200MHz wideband 5G radio solutions will serve shared network building needs for high-call-volume while 2.1GHz 5G radio solutions will support the mixed deployment of 3G, 4G and 5G networks. This will help China Telecom and China Unicom to quickly achieve coverage breadth and depth.
China Telecom has also selected Ericsson 5G Core portfolio solutions. These include Cloud Packet Core, Cloud Unified Data Management and Policy products, built on cloud-native technology for operational efficiency and agility to launch new 5G services. The Ericsson 5G Core network will be deployed on Ericsson Network Functions Virtualization Infrastructure (NFVI) along with Ericsson Dynamic Orchestration.
China Unicom + China Telecom pick Huawei and ZTE
China Unicom and China Telecom announced the winners of its 5G Stand Alone (SA) tenders, which were valued at a combined CNY183.5 billion. Vendor shares are as follows:
Huawei – 35.9%
ZTE – 35.9%
Ericsson – 17.9%
Datand Mobile Communications – 10.3%
Nokia did not win any share of the contracts.
