Mobile telecom equipment maker Ericsson reported a bigger that expected rise in first-quarter operating earnings on Wednesday, adding that it saw particularly strong growth in North America. Boosted by the performance, the firm also raised its outlook for the global networks market.
The Swedish firm posted an operating profit of 4.9 billion Swedish crowns ($530 million), reversing a 312 million crown loss a year ago, easily topping the mean forecast for a 2.8 billion profit seen in a Reuters poll of analysts.
Ekholm predicted that Beijing would also push 5G infrastructure “very quickly,” and that Ericsson wants to position itself as a supplier to operators using China’s new network.
Last month, Ericsson signed a global patent license agreement with Chinese smartphone maker OPPO. Adler Feng, head of OPPO’s intellectual property department, said at the time that the agreement would lay a solid foundation for further cooperation between the two companies in the 5G era.
However, Ericsson’s growth in China could be hampered by an investigation into the firm’s licensing model by Chinese authorities. Ekholm said Ericsson was working with the Chinese government on the investigation but declined to comment further.
He also told CNBC that although new commercial contracts may impact the company’s revenues in the short-term, they would drive growth in the long run.
Speaking to CNBC’s “Squawk Box Europe” on Wednesday, CEO Borje Ekholm said strong momentum in the U.S. would help position Ericsson as a top provider in 5G technology.
“We foresee that some of these contracts will dilute our operating margins short-term a bit, but … for us it’s critical to strengthen our market position, (and) we’re not going to do that with price as a weapon, we’re going to do that with value to the customer as a weapon,” he said.