uploads/2018/06/4-6.png

What’s Expected to Drive Ericsson’s Revenue in 2018 and Beyond?

By

Updated

Revenue expected to be flat in fiscal 2019

As we’ve seen, Ericsson’s (ERIC) revenue is estimated to fall 5.5% YoY (year-over-year) in fiscal 2018 to $22.94 billion. Revenue is expected to remain flat at $22.95 billion in fiscal 2019. Ericsson has been struggling with declining sales over the last several quarters as 4G deployments declined drastically, first in developed markets such as North America and Western Europe and then in Mainland China (FXI) and Southeast Asia.

The market environment is expected to improve for Ericsson and other telecommunications equipment firms such as Nokia (NOK) and Juniper Networks (JNPR) in fiscal 2019 with the introduction of 5G in the next few months and massive deployments of the technology in later years.

Article continues below advertisement

RAN equipment market expected to decline in fiscal 2018

Although Ericsson expects RAN (radio access network) to decline 2% YoY (year-over-year) in fiscal 2018, it has estimated the market to grow at a CAGR (compound annual growth rate) of 2% from 2018 to 2022.

Ericsson was struggling in the radio market for several years prior to the second half of 2017 when it increased its market share. In 2016, Ericsson launched its ERS (Ericsson radio system) to reduce costs and improve service delivery efficiencies. Ericsson stated that 61% of radio deliveries were based on ERS in the fourth quarter of 2017. It rose to 84% in the first quarter of this year and is expected to be 100% by the end of fiscal 2018.

According to a report from Dell’Oro Group, Ericsson is the leading vendor across EPC (evolved packet core) variants, beating ts peers Cisco Systems (CSCO), Nokia (NOK), Huawei, and ZTE.

Advertisement

More From Market Realist