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Will 4G Deployments Drive Ericsson’s Revenues?

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4G sales in China were stable in the last quarter

As stated earlier, Ericsson’s (ERIC) mobile broadband sales fell in markets such as Brazil, Russia, and the Middle East due to a weak macroeconomic environment. Mobile broadband projects were completed in Europe last year and thus sales fell YoY as well in this region. 4G sales in China were, however, stable driven by the fast pace of 4G deployments.

We can see in the below chart that sales from the Middle East, India, and Africa fell 24%, 20%, and 13% YoY (year-over-year) in 2Q16. All regions had negative sales in the last quarter with the exception of Southeast Asia.

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Emerging markets are important for 4G penetration

In 2015, the telecom industry saw a massive transition from 3G to 4G networks. While the majority of subscribers in the United States and Europe are already on 4G networks, telecom companies are targeting China (FXI) and emerging markets (EEM) to increase penetration.

Ericsson is expanding its presence in India (INDA) and has announced several major investments and deals in the country. Ericsson’s global president and CEO, Hans Vestberg, stated that India will play a key role in the company’s growth strategy in terms of market, resources, and investments.

This means the company will increase its investments in the country, expand its employee base, and diversify its product offerings in the information and communications technology (or ICT) space.

Revenues from India rose over 20% YoY in 1Q16, 35% YoY in 4Q15, and by 70% YoY in 2015.

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