While Ericsson had a solid first quarter of 2020 in terms of earnings, the networking equipment giant sees near-term uncertainty around sales volumes due to the COVID-19 pandemic.
Ericsson president and CEO Börje Ekholm said the telecommunications industry is expected to show resilience through the pandemic, however, he is concerned that 5G investments in Europe will likely be delayed. This will cause the region to fall behind even further in critical digital infrastructure for the future. As a result, Ericsson said governments should encourage 5G investments.
Live in 29 networks
Ekholm said that Ericsson now has 29 live networks across four continents including 5G deployments in China. Ericsson expects more contracts to begin in North America after the T-Mobile and Spring merger gain momentum and investments increase during the second half of 2020.
The second quarter is likely to be a tad softer than normal due to the uncertainty induced by COVID-19 as it will be impossible to predict when the restrictions in many countries will be lifted and how recovery will take place.
Ekholm said the disruption caused by COVID-19 has shown that network infrastructures are critically important to society not just when times are normal, but especially in times of crisis. Ericsson has been working closely with customers to help keep the networks running while at the same time keeping most of its workforce at home for social monitoring. Ericsson said it plans to work to improve resilience to coronavirus impacts by increasing inventories of critical components.
But Ekholm warned that the longer the lockdown in many countries continues, the more disruptions will likely occur to Ericsson’s supply chains, making it more difficult to keep networks running. However, so far the company has seen no material effects on its demand situation. It is prudent to believe that the slowdown in the general economy may lead some operators to delay investment programs, he added.