Ulrich Rathe

Ulrich Rathe questioned the bigger picture of Ericsson's revenue outlook, specifically if mid-single-digit revenue growth is possible in a flattish RAN market, given growth opportunities in mission-critical and other areas, or if Q4's mid-single-digit organic growth was a phasing effect.

Answer

Börje Ekholm, CEO, believes the size of the mission critical, enterprise, and 5G core markets (with only a quarter of networks upgraded to standalone) are large enough to drive 'pretty nice long term growth,' potentially low to mid-single digits. He sees this combined with operating leverage, enterprise profitability, and share buybacks leading to a 'very healthy growth profile.'

Ulrich Rathe from Sanford C. Bernstein & Co., LLC asked for details on concrete measures being taken to mitigate tariffs and whether the company is actively realigning its supply chain or waiting for more certainty.

Answer

CFO Lars Sandström stated that while Ericsson is preparing for various scenarios, no major investment decisions on supply chain realignment have been made due to ongoing uncertainty. CEO Börje Ekholm added that the U.S. factory, built around 2020, already provides significant flexibility to manage the current situation.

Ulrich Rathe requested more detail on tariffs, asking what the 1% impact for Q2 reflects given recent news, and for more color on the company's 'resilience,' such as the share of U.S. sales produced domestically and available manufacturing capacity.

Answer

CFO Lars Sandstrom clarified the 1% impact was their best estimate based on the information available as of the previous Friday. While confirming a U.S. production site, he did not disclose specific volumes, but noted they can shift production globally. CEO Börje Ekholm added that the core issue is the component and material supply chain, emphasizing the long-term goal of building a 'Western ecosystem' to enhance resilience.

Ulrich Rathe of Bernstein questioned the rationale for maintaining a wide €500 million guidance range halfway through the year and why the company lowered the entire range instead of just guiding towards the lower end of the previous one.

Answer

President & CEO Justin Hotard explained that after highlighting challenges at the top end of the range in Q1, the significant currency headwind and the full-year tariff impact made it prudent to lower the entire range. CFO Marco Wirén added that uncertainty around the final tariff impact also justifies keeping the range wider to maintain flexibility.

Ulrich Rathe from Bernstein questioned the rationale for maintaining a wide €500 million guidance range halfway through the year and why the company lowered the entire range instead of just guiding to the low end.

Answer

President & CEO Justin Hotard explained that it was prudent to lower the range due to significant currency headwinds and tariff impacts, which were largely outside of their control. He noted the business is heavily back-end loaded. CFO Marco Wirén added that uncertainty around tariffs necessitates a wider range for flexibility.

Ulrich Rathe requested details on the EUR 20-30 million tariff impact assumptions for Q2 and asked if the divisional outlook provided in Q4 2024 remains in place.

Answer

President and CEO Justin Hotard explained the tariff impact is a Q2 cost estimate, not assuming any price changes, and that the team is actively working on mitigation using its global manufacturing network. CFO Marco Wiren reiterated the full-year divisional outlook: strong growth in Network Infrastructure, stable development in Mobile Networks, good growth in Cloud and Network Services, and an operating profit of approximately EUR 1.1 billion for Nokia Technologies.

Requested details on the assumptions behind the EUR 20-30 million tariff impact and asked for an update on the divisional outlook provided in the previous quarter.

Answer

The tariff impact is a Q2 cost estimate based on the current dynamic situation, with mitigation efforts underway utilizing Nokia's global manufacturing network, including five U.S. facilities. The divisional outlook from Q4 is reiterated: strong growth in Network Infrastructure, stable development in Mobile Networks, good growth in Cloud & Network Services, and a ~EUR 1.1B operating profit assumption for Nokia Technologies.

Ulrich Rathe asked about the potential impact of a new U.S. administration's approach to China on Nokia's competitive situation, focusing specifically on the technological competitiveness of Chinese products given potential sanctions.

Answer

CEO Pekka Lundmark stated that while the share of Chinese suppliers in the U.S. is already minimal, their competitiveness elsewhere is a key issue. He acknowledged that the technological competitiveness of Chinese vendors depends on their access to the latest silicon and internal R&D, but framed the future of U.S. policy and potential sanctions as a political question that is too early for Nokia to speculate on.

Ulrich Rathe asked CEO Benedicte Fasmer about her vision for change at Telenor beyond M&A after her first 100 days. He also requested a quantification of the change in cost allocation that impacted corporate costs.

Answer

CEO Benedicte Fasmer stated her immediate focus is delivering on the 2025 strategy to build trust, with a new strategic direction to be unveiled in November. She highlighted potential in mission-critical services and a focus on customer orientation. CFO Torbjorn Wist quantified the cost allocation shift at around NOK 100 million.

Ulrich Rathe questioned the pricing potential in the Nordics amid lower inflation and asked why Telenor is cutting CapEx while competitors are increasing investment in Norwegian cable networks.

Answer

CEO Benedicte Fasmer said she expects continued service revenue growth driven by value-added services, not just inflation-led pricing. CFO Torbjorn Wist explained that Telenor continues to invest in fixed infrastructure but does so strategically to avoid overbuild, while also closely monitoring the regulatory debate on open access.

Ulrich Rathe of Bernstein Societe Generale Group asked about broadband net adds in Switzerland and the Netherlands, specifically questioning the flanker brand's performance in Switzerland and why UEFA rights had not yet provided a larger boost in the Netherlands.

Answer

André Krause, Executive, explained that Swiss flanker brand churn was a minor factor related to a young customer base reaching contract end dates. An executive, likely Stephen van Rooyen, addressed the Netherlands, stating the UEFA impact was minimal due to timing, as the games only started late in the quarter, and the full effect has yet to materialize.

Ulrich Rathe sought clarification on the Belgian memorandum of understanding with Proximus, asking if the mutual wholesale access is at the passive or active level and if the terms will be different for partners versus other takers.

Answer

Executive Michael Fries confirmed the agreement is currently under regulatory review. Executive John Malone specified that it is a reciprocal passive deal covering approximately 2 million homes, with Telenet building 60% and Proximus 40%. He emphasized that the principle of an open, non-discriminatory wholesale regime is already public and will be part of the final agreement.

Ulrich Rathe of Bernstein Societe Generale Group questioned the specific value creation levers of the planned U.K. NetCo and sought clarification on VodafoneZiggo's cash distribution outlook.

Answer

Michael Fries, CEO of Liberty Global, detailed that the U.K. NetCo creates value by attracting infrastructure capital, providing financial flexibility to accelerate fiber builds, and opening wholesale revenue opportunities. Regarding the Netherlands, Charles Bracken, CFO of Liberty Global, and Ritchy Drost, CFO of VodafoneZiggo, clarified that the 'up to $300 million' guidance is maintained to provide flexibility for potential non-recurring investments like spectrum auctions.