AVN 65.31 Decreased By ▼ -0.86 (-1.3%)
BAFL 30.25 No Change ▼ 0.00 (0%)
BOP 4.63 Decreased By ▼ -0.10 (-2.11%)
CNERGY 3.89 Decreased By ▼ -0.12 (-2.99%)
DFML 13.50 Decreased By ▼ -0.60 (-4.26%)
DGKC 42.15 Decreased By ▼ -1.54 (-3.52%)
EPCL 46.13 Increased By ▲ 1.48 (3.31%)
FCCL 11.45 Decreased By ▼ -0.38 (-3.21%)
FFL 5.19 Increased By ▲ 0.22 (4.43%)
FLYNG 5.82 Decreased By ▼ -0.28 (-4.59%)
GGL 10.04 Decreased By ▼ -0.34 (-3.28%)
HUBC 63.21 Increased By ▲ 0.91 (1.46%)
HUMNL 5.73 Decreased By ▼ -0.12 (-2.05%)
KAPCO 27.81 Increased By ▲ 0.26 (0.94%)
KEL 2.15 Decreased By ▼ -0.06 (-2.71%)
LOTCHEM 25.37 Decreased By ▼ -1.23 (-4.62%)
MLCF 21.65 Decreased By ▼ -0.87 (-3.86%)
NETSOL 84.95 Decreased By ▼ -1.25 (-1.45%)
OGDC 86.64 Increased By ▲ 0.37 (0.43%)
PAEL 10.96 Decreased By ▼ -0.31 (-2.75%)
PIBTL 4.21 Decreased By ▼ -0.07 (-1.64%)
PPL 78.65 Decreased By ▼ -1.43 (-1.79%)
PRL 13.61 Decreased By ▼ -0.05 (-0.37%)
SILK 0.88 Decreased By ▼ -0.02 (-2.22%)
SNGP 41.00 Decreased By ▼ -0.75 (-1.8%)
TELE 6.01 Decreased By ▼ -0.20 (-3.22%)
TPLP 16.02 Decreased By ▼ -0.25 (-1.54%)
TRG 111.89 Decreased By ▼ -0.66 (-0.59%)
UNITY 14.01 Decreased By ▼ -0.34 (-2.37%)
WTL 1.14 Decreased By ▼ -0.06 (-5%)
BR100 4,026 Decreased By -48.6 (-1.19%)
BR30 14,402 Decreased By -123 (-0.85%)
KSE100 40,451 Decreased By -396 (-0.97%)
KSE30 15,110 Decreased By -101.7 (-0.67%)
Follow us

STOCKHOLM, July 16 (Reuters) - Sweden’s Ericsson, caught in the middle of a geopolitical battle between Beijing and the West, said on Friday it was no longer banking on previously anticipated contract wins for 5G tenders in China, sending its shares down more than 8%.

The telecoms company has previously warned that its business in China could fall afoul of Sweden’s move to ban Chinese equipment giant Huawei and in the second quarter its sales there fell by 2.5 billion Swedish crowns ($290 million), the first drop in three years.

Asked on an analyst call if Ericsson expected to recoup that money, Chief Executive Borje Ekholm replied: “No, it’s not coming back.”

Ericsson currently generates just under 10% of its revenues in China and despite the country preparing for the next round of a massive 5G build-out Chief Financial Officer Carl Mellander told Reuters that it was “prudent to forecast materially lower market share” in the future.

European governments have been tightening controls on Chinese companies building 5G networks following diplomatic pressure from Washington, which alleges Huawei equipment could be used by Beijing for spying. Huawei has repeatedly denied being a national security risk.

China is preparing for the second phase of its 5G build-out and Mellander said that tenders expected during the second quarter did not take place.

Initial contract allotments are expected to be announced before the end of this month, according to two sources familiar with the matter.

CONTRAST WITH NOKIA

Ericsson’s dour outlook was in sharp contrast to Nokia , along with Huawei one of its main rivals in the race to upgrade global wireless systems to 5G.

The Finnish group, whose shares were up 0.5%, said this week it would likely raise its full-year outlook due to a stronger-than-expected second quarter.

Ericsson, which last year took a hit of about 1 billion crowns due to writedowns of product inventory in China, wrote down a further 300 million crowns in the second quarter.

It said network sales were strong in most of its other markets, and it signed an $8.3 billion five-year 5G contract with Verizon, its single largest deal.

But the drag from China meant that group revenues, at 54.9 billion crowns missed consensus analyst forecasts of 57.20 billion.

Core earnings, up at 5.8 billion Swedish crowns from 4.5 billion a year ago, also missed the mean forecast according to Refinitiv of 6.01 billion crowns.

The declines in China also hurt Ericsson’s struggling digital services business, which missed expectations on sales, gross profit and operating profit.

“The investor base is likely to tire of Networks consistently carrying the can for under-performing digital services,” Sandeep Deshpande, Head of the European Technology team at JPMorgan, wrote in a research note.

“Questions are going to arise whether a rethink of the Digital Services portfolio is required especially as China could remain a drag there (too),” Sandeep Deshpande, Head of the European Technology team at JPMorgan.

Comments

Comments are closed.

Ericsson’s 5G march hits a wall in China

Suddenly, ailing SOEs come under PDM govt’s focus

At least 39 dead as passenger coach falls into ravine in Lasbela

LPG hits historic high of Rs300/kg: LPGA demands setting up of probe commission

50pc duty imposed on import of ‘Mild Hybrid Vehicles’

Al-Nahyan due tomorrow to discuss trade, investment

Flood-hit areas: Rs8.39bn subsidy to be provided to farmers

Pakistan expresses interest in possibility of currency swap with Russia

FBR readies presentation for IMF

Ogra rejects oil price speculations

Live debate on economy: Tarin accepts challenge