The secrets behind 5G leadership

The weakening of the global economy in the wake of rising interest rates, geopolitical worries and subdued consumer and business spending, has led to a decline in telecom gear shipment across major geographies. At the same time, 5G is recognized as a key enabler for digitalization of societies and industries, which in turn can support economic growth and decarbonization.

Fifty percent of the world’s mobile traffic (excluding China) is carried over Ericsson networks, which connect more than 2.5 billion subscribers. “The higher cost of capital affects some of our customers, says Carl Mellander, CFO at Ericsson, and points out that export finance has an important role to play in the current environment: “The export credit system has an important counter-cyclical purpose in tough times. It isn’t just customers with scarce funding sources who are interested in export credits, but also large well-capitalized enterprises looking to diversify their financing where an ECA cover means they don’t have to extend their normal credit lines.”

Ericsson is present in 180 countries and employs 100,000 people. The cooperation with EKN goes back to 1939 and Mellander confirms, “it has definitely strengthened our competitiveness.”

The global 5G rollout is currently in full swing, with the US and select Asian markets at the forefront. “5G technology is a powerful enabler that lets companies try new business models, entire industries switch to digital manufacturing and citizens access a range of digital services and means of reaching out,” says Mellander.

Largest cover ever provided

In markets where fixed telephony used to be out of range for many citizens, such as India, the transformational power of mobile communications is astonishing. The country's largest telecom player Reliance Jio recently received a USD 2.2 billion fund support from EKN to finance equipment from Ericsson for the current 5G rollout. This is the largest cover ever provided by EKN for a deal to a private corporate globally.

“5G rollout in India is currently happening faster than anywhere else in the world, and Ericsson and EKN are instrumental in making it happen,” says Mellander.

In theory, 5G delivers an average speed of 10 Gbps, which is more than 100 times faster than current 4G technology and an excellent answer to India’s needs. “India is among the top data consuming markets in the world and 5G is much more energy efficient than previous generations of cellular telephony,” notes Mellander.

Ericsson reported 74 per cent growth in net sales in the second quarter of 2023 in South East Asia, Oceania and India, of which around 90 per cent comes from India.

Mellander points out that, “India has its sight set on technological leadership, not just by becoming the first country to successfully land a spacecraft near the lunar south pole, but in creating a truly digital society for all.”

“An incredible privilege”

In April 2024, Mellander will embark on a new journey when leaving Ericsson after 25 years. “It has been an incredible privilege to serve as Ericsson’s CFO during the last 7 years and witness how we have regained technology leadership. Ericsson is now well positioned globally to continue building on its industry-leading position and to expand into enterprise.”

Mellander has been with Ericsson since the early days of cellular telephony when Ericsson and Nokia were among the pioneers. How could two players from small countries in the northern outskirts of Europe achieve such dominance? “At Ericsson, we benefitted from a long and rewarding partnership with then state-owned telecom incumbent Televerket, later Telia. Plus the fact that Scandinavia rolled out the first cellular network, NMT, which used analogue technology. Ever since 1876 Ericsson has been innovating based on the founder’s idea that communication is a basic human need.”

Mellander says the close partnership with EKN has been instrumental to the successful completion of a string of deals over many decades. “Transparency and trust are the cornerstones of our relationship,” says Mellander. At EKN, Senior Underwriter and Key Account Manager Ove Nyström adds that, “we are very pleased with our long relationship with Ericsson, including financing transactions from basically all parts of the world and with a variation of credit quality from both project financing and well-established corporates.”