(Add details on results, CEO quote, background)
STOCKHOLM, July 16 (Reuters) – Sweden’s Ericsson on Friday reported lower-than-market second quarter baseline profits as strong sales of 5G equipment in most markets were offset by lower sales in China continental
The company’s quarterly adjusted operating profit reached SEK 5.8 billion ($ 669.9 million), up from SEK 4.5 billion a year ago, missing the average forecast of SEK 6.01 billion. , according to estimates by Refinitiv.
Total sales of the telecommunications equipment maker, rival of Chinese Huawei Technologies Co Ltd and Finnish Nokia, fell to 54.9 billion crowns from 55.6 billion, missing the 57.20 billion seen by analysts.
Sales in mainland China fell by 2.5 billion crowns.
While Ericsson and Nokia have both benefited from the Huawei ban in several countries, the exclusion of the Chinese company in Sweden is expected to result in lower revenues for the Swedish company in China.
Initial contract awards for the second phase of the 5G deployment in China are expected to be announced before the end of this month, according to two sources familiar with the matter.
“It is prudent to forecast a significantly lower market share in mainland China for digital networks and services, as the earlier decision to exclude Chinese providers from Swedish 5G networks could influence market share allocations,” said the CEO Borje Ekholm in a statement.
Meanwhile, Nokia, which reports its results on July 29, is expected to secure its first 5G radio contracts in China. Ericsson achieves just under 10% of its turnover in China.
However, on Friday Ericsson signed a five-year, $ 8.3 billion 5G contract with Verizon, its biggest deal. ($ 1 = 8.6584 Swedish kronor) (Reporting by Supantha Mukherjee; editing by Niklas Pollard)