Ericsson’s Ekholm cites M&A as part of 5G growth

Ericsson’s Ekholm cites M&A as part of 5G growth

04 March 2020 | Natalie Bannerman

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Ericsson’s president and CEO Börje Ekholm (pictured) has revealed the company’s plans to focus on M&A as part of its overall growth strategy.

As part of the company’s 2019 annual report, Ekholm stated: “M&A activity will continue to be an important part of our growth strategy, where we see potential value creating portfolio-near acquisitions as enablers for future growth.”

The revelation comes as part of the company’s growing 5G activities. Over the next six years Ekholm expects the number of 5G subscribers to top 2.6 billion. Additionally, he says that the number of mobile IoT connections will reach five billion across all sectors, increasing the addressable market for operators by 30% by 2030.

“We are increasing our investments in IoT and advanced connectivity solutions that will allow us to capture this growing market. We already see very strong demand for these solutions,” said Ekholm.

Ericsson performed well for FY19, reporting a gross income of US$8.9 billion (84.8 billion SEK), up from $7.1 billion (68.2 billion SEK) in 2018. Conversely net income came in at $191 million (1.8 billion SEK).

Carl Mellander, Ericsson CFO, said: “Following improved profits and better capital efficiency, 2019 free cash flow before M&A improved four times over 2018 (SEK 17.8 billion, excluding the SEC/DOJ payments).”

“The generated cash flow has resulted in a solid net cash position (SEK 34 billion) at the end of 2019. The gross cash level (SEK 72 billion) provides strong liquidity and resilience.”

“During 2019, we adjusted our sales ambition for 2020 up by SEK 20 billion to SEK 230–240 billion,” added Ekholm. “Our operating margin target for 2020 remains at more than 10% and we have crystallised the 2022 operating margin target as a range of 12–14%.”

Ericsson was recently named as one of 11 companies (and their corresponding executives) to join the HAPS Alliance. Their primary goal is to promote the use of high-altitude vehicles in the Earth’s stratosphere and “eliminate the digital divide” worldwide.