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Does Ericsson’s 5G Success Depend on Huawei Woes?

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Countries ban Huawei products

The United States and Australia have banned Huawei products from being used to build their 5G networks. According to a recent report by the Wall Street Journal, the United States has even gone the extra mile to ask friendly countries to shun Huawei products in their 5G network buildout. Huawei is a fierce rival of Ericsson (ERIC) in the telecom equipment vendor market. It held a 28% share of the global telecom gear market in 2017 compared to Ericsson’s 27% and Nokia’s (NOK) 23%, according to IHS Markit. Samsung (SSNLF) held a 3.0% share of the global telecom gear market in 2017.

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Ericsson not banking on Huawei’s political troubles

Given the stiff competition between Huawei and Ericsson, there has been speculation that a ban of Huawei products in some countries could boost Ericsson’s sales and help it capture more market share at the expense of its China-based rival. But Ericsson has suggested that it’s not banking on capitalizing on Huawei’s political troubles to succeed in the 5G era. Speaking at an investor event in Barcelona last month, Ericsson CEO Borje Ekholm said the company has not seen any big increase in its sales resulting from the United States and Australia shunning Huawei equipment. Still, Huawei’s political troubles could be a tailwind for Ericsson.

Ericsson picks up 5G contracts in America

The United States is expected to lead 5G uptake, and that should be good news for Ericsson, as it is the top telecom equipment vendor in North America. Ericsson has been selected alongside Nokia and Samsung to supply equipment for AT&T’s 5G rollout. AT&T is one of the largest operators in North America. Ericsson has also won a $3.5 billion multiyear 5G-related contract from American operator T-Mobile (TMUS).

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