STOCKHOLM: Sweden's Ericsson warned it faced higher costs this year as it rolls out new 5G networks and was also hit by a temporary slowdown in its U.S. market, sending its shares 7per cent lower on Friday. After a number of lean years, Ericsson has been boosted by the roll-out of 5G, particularly in the United States, and analysts hope it can benefit from a U.S. campaign to shut out Chinese rival Huawei from supplying 5G equipment.
In October, rival Nokia shocked investors by slashing its profit outlook for 2019 and 2020 and pausing dividend payments to allow for heavier investments in 5G, leading its shares to drop by a fifth. That has led the United States to blacklist Huawei and launch a worldwide campaign to try to persuade allies to ban it from their 5G networks, alleging its equipment could be used by Beijing for spying - which Huawei denies.
"It was a significant impact in a small part of the market which means the quarter came out negative in North America," Ekholm said."But in general demand is very strong there."Ericsson, which has targeted market share in China, said it was still too early to assess possible volumes and price levels for deploying 5G there.