Andreas Joelsson

Andreas Joelsson questioned the company's net cash position needed to run operations, assuming SEK 25 billion in sustainable free cash flow, and whether a long-term buyback program is being considered to support EPS growth.

Answer

Lars Sandström, SVP and CFO, stated that a solid net cash position is important, with SEK 61.2 billion in net cash and SEK 25 billion distribution leaving a solid level for 2025 given the business outlook. Börje Ekholm, CEO, added that geopolitics and supply chain factors influence this. Both confirmed that the buyback program is a new tool intended to be recurring, with its size varying annually based on the outlook.

Andreas Joelsson from Carnegie Investment Bank AB asked a forward-looking question about how investments in 5G standalone and AI could affect Ericsson's future product mix and operational leverage.

Answer

CEO Börje Ekholm provided a detailed strategic overview, explaining that 5G standalone is crucial for enabling advanced network capabilities and requires core network and mid-band radio upgrades, creating new opportunities. He positioned AI as a fundamental technology that will drive internal efficiencies, create autonomous networks, and fuel traffic growth as applications move to the edge, linking these trends to the Vonage and Aduna platforms.

Andreas Joelsson asked how customers are balancing investment needs for programmable networks and capacity against global uncertainty, and what the progression looks like for 5G stand-alone and network APIs through 2025.

Answer

CEO Börje Ekholm acknowledged that uncertainty can slow investment, but noted that persistent data traffic growth necessitates network investment. He stated that network API progress is in early stages and less affected by macro trends, citing the U.S. fraud API launch as a key milestone. He stressed that migrating to 5G stand-alone is a critical next step for operators to unlock new services and performance, though adoption in markets like Europe is still lagging.

Andreas Joelsson from Carnegie sought clarity on the potential of programmable networks, asking whether Ericsson expects the main financial impact to come directly from API sales or indirectly from increased network investment by operators.

Answer

CEO Börje Ekholm explained that the two are tightly linked. While enterprise opportunities like APIs must be profitable on their own, their success will stimulate demand for programmable networks. He highlighted the strategy is to create investment cases where new CapEx directly generates new revenue, a shift from the traditional consumer model.

Andreas Joelsson from Carnegie requested more detail on regional network trends, asking about the sustainability of the North American recovery and the primary reasons for investment delays in other regions.

Answer

CEO Börje Ekholm explained that the U.S. improvement stems from inventory normalization and initial capacity investments, but it's too early to declare a major turnaround. He attributed weakness elsewhere to a broader industry issue of low returns on capital, causing operators to 'sweat assets,' compounded by macroeconomic pressures in Africa and Latin America.

Andreas Joelsson from Carnegie asked if mobile service revenue growth is expected to accelerate in coming quarters and questioned the sustainability of the company's record-high profitability margins. He also followed up on the full-year tax outlook.

Answer

CFO Bart Vanhaeren explained that underlying service revenue growth is around 2% after excluding one-offs, with an acceleration expected in the second half of the year driven by postpaid and home services. He affirmed that the high profitability is sustainable due to an embedded efficiency culture. Regarding taxes, he guided that cash taxes paid would be slightly up year-over-year due to increased profitability.

Andreas Joelsson from Carnegie followed up on the tower deal, asking if the remaining 2,500 towers would also be sold and what the tax implications of the current deal are. He also inquired about the potential P&L and cash flow impact of a currency devaluation in Bolivia and sought reasons for the sudden, strong subscriber intake in Colombia, questioning if it could lead to higher churn.

Answer

Executive Bart Vanhaeren stated that divesting the remaining 2,500 towers is not a top priority, as many are in Bolivia or in difficult-to-access locations. Regarding Bolivia, he acknowledged the risk of devaluation but explained the company is prepared, having localized 85% of its OpEx, and does not expect a material impact on its ability to generate equity free cash flow. On Colombia's subscriber growth, he explained it was healthy, with 35% of new postpaid customers coming from low-churn FMC offers, and he does not foresee a future churn impact.