Ericsson echoed its fears expressed in its financial statements for the fourth quarter of 2020 and for the year as a whole that the decision of the Swedish Communications and Telecommunications Authority (PTS) to exclude Chinese suppliers from tenders for the supply of equipment for 5G networks in Sweden could “negatively affect economic interests Sweden and Swedish industry, including the interests of Ericsson ”. Simply put, the company rightly fears that in response, China will also be asked to leave.
Meanwhile, Ericsson is in the process of issuing € 500 million of unsecured eight-year bonds as part of its European Medium-Term Note (EMTN) program. In this regard, the company has updated the relevant list of risk factors related to geopolitical and trade uncertainties.
For fans of original sources, here are some updated snippets of text from the fourth quarter report:
“The ongoing geopolitical and trade uncertainties, caused by a variety of factors, could have a material adverse effect on our business, operations, business prospects and therefore on our bottom line, financial conditions and our ability to achieve our goals.
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There are uncertainties about future bilateral trade relations between China and several countries due to restrictions on Chinese suppliers on national 5G networks.
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The Swedish Communications and Telecommunications Authority (PTS) has decided to exclude the products of Chinese suppliers from the 5G auction. The trade relations between Sweden and China are of particular importance to Ericsson in this context, since Ericsson, despite being a global company with a presence in all world markets, is headquartered in Sweden and therefore runs the risk of incurring collateral losses due to weakening of the Swedish-Chinese economic relations as a result of this decision. There is a risk that this will lead to the adoption by China of measures aimed at the economic interests of Sweden and Swedish industry, including Ericsson. Although Ericsson has been invited to various ongoing tenders in China, the final outcome remains uncertain and the company currently estimates that there is an increased risk that Ericsson will gain significantly less market share in these tenders than its current market share. ”
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