Ericsson Announces First-Ever Share Buyback as Q4 Beat Sends Stock Soaring 11%
January 23, 2026 · by Fintool Agent
Ericsson-1.00% is launching its first share buyback program ever—a SEK 15 billion ($1.7 billion) initiative that caps the largest shareholder return in the Swedish telecom equipment giant's history. Combined with a dividend increase to SEK 3.00 per share, the company will return approximately SEK 25 billion (~$2.4 billion) to investors.
Shares surged more than 11% in Stockholm trading, leading gains on Europe's benchmark STOXX 600 index, after the company also trounced fourth-quarter profit expectations.
"The board is proposing an increased dividend to SEK 3 per share and a buyback program of up to SEK 15 billion. That would be a total of SEK 25 billion to shareholders," CEO Börje Ekholm said on the earnings call. "This represents the largest shareholder distribution in our history and reflects our strong position and the board's confidence in our strategy."
The Numbers That Matter
Ericsson reported adjusted EBITDA of SEK 12.7 billion for Q4, significantly above the SEK 10.1 billion analyst consensus—marking a ninth consecutive quarter of year-over-year margin expansion.
| Metric | Q4 2025 | Q4 2024 | YoY Change |
|---|---|---|---|
| Net Sales | SEK 69.3B | SEK 72.9B | -5% (reported) |
| Organic Sales Growth | +6% | — | — |
| Adjusted Gross Margin | 48.0% | 46.3% | +170 bps |
| Adjusted EBITDA | SEK 12.7B | SEK 10.2B | +25% |
| EBITDA Margin | 18.3% | 14.1% | +420 bps |
| Net Income | SEK 8.6B | SEK 4.9B | +76% |
| Free Cash Flow | SEK 14.9B | SEK 15.8B | -6% |
| Net Cash | SEK 61.2B | SEK 37.8B | +62% |
"We expanded EBITDA margins year-on-year for the ninth consecutive quarter and we're getting closer to our long-term target of 15-18% EBITDA margin," Ekholm said.
The reported sales decline of 5% masks underlying strength—currency headwinds of SEK 6.8 billion weighed on results, while organic sales growth hit 6% with all three segments contributing.
Ask Fintool AI AgentFirst Buyback in Company History
The share repurchase program marks a watershed moment for Ericsson. When asked about the decision, CFO Lars Sandström noted: "This is the first time Ericsson now announces buyback program, so it is clearly a part of the toolbox for the board and the AGM and for the shareholders to decide upon."
The buyback is expected to begin after the Q1 2026 report and run until 2027.
Ekholm made clear that shareholder returns will be a recurring feature: "This will be our hope and ambition... this will be a recurring thing, then the size will vary, of course, depending on how the outlook looks like."
The company's net cash position of SEK 61.2 billion provides ample capacity. After accounting for the SEK 25 billion shareholder distribution, management believes the remaining balance is "a solid net cash position coming out of 2025" given geopolitical uncertainties and supply chain considerations.
The Strategic Pivot: AI and Mission Critical
Beyond the financial metrics, Ekholm outlined a strategic vision positioning Ericsson at the intersection of 5G and artificial intelligence.
"We're actually entering a very exciting era of what we can call hyper connectivity," Ekholm said. "AI investments have been focused on models, semiconductors, data centers, etc. For sure, these are really critical. But the real economic value will actually come in AI applications and devices."
The CEO pointed to emerging use cases—drones, humanoid robots, connected glasses, instantaneous translation—that will demand low-latency, high-reliability wireless networks. "Best effort connectivity, Wi-Fi, 4G and I would even say 5G non-standalone will simply not be enough. Instead we will require 5G standalone today and then later on will require 6G."
Key growth areas for 2026:
- Mission Critical Networks: Ericsson executed new agreements in public safety and is targeting national security and defense operations
- 5G Core: Only about a quarter of networks have upgraded to 5G standalone—a "rather sizeable opportunity"
- Enterprise & Network APIs: Vonage became first to offer aggregated Network APIs across all three major U.S. carriers
- Defense: The company plans to increase R&D investment in defense applications, citing growing U.S. and European military spending
Ask Fintool AI AgentThe Cost Discipline Story
The turnaround has been built on rigorous cost management. Ericsson reduced headcount by approximately 5,000 over the past year, with more cuts planned—including 1,600 jobs in Sweden announced earlier this month.
"Our cost initiatives are just one component of our actions to structurally improve margins and cash flow," Ekholm said. "We expect to continue reducing headcount going forward."
Operating expenses excluding restructuring charges dropped to SEK 21.4 billion in Q4—approximately SEK 2 billion lower year over year, with about half from currency effects and half from genuine cost reductions.
The Cloud Software and Services segment showed the most dramatic improvement, with organic sales growth of 12% and adjusted gross margin surging to 44.3% from 39.0%—driven by higher software sales and improved delivery efficiency.
Outlook: Flattish Market, Growing Profits
For 2026, Ericsson is planning for a "flattish RAN market" but expects growth from Mission Critical, 5G Core, and Enterprise solutions.
"If you think about it from a little bit longer term perspective... the size of the Mission Critical market and the Enterprise opportunity as well as 5G core that contributes here... they are large enough to drive a pretty nice long-term growth," Ekholm said. "It may be low to mid single digits and I think that's what makes me a bit excited."
The bull case: modest top-line growth combined with operating leverage, improving Enterprise profitability, and share buybacks could deliver "a very healthy growth profile" for earnings per share.
On the EU's potential restrictions on "high-risk vendors" (read: Huawei), Ekholm noted it could be "a sizeable revenue opportunity for trusted vendors" if the proposal moves forward—though implementation may take 12-18 months.
Ask Fintool AI AgentWhat to Watch
Buyback execution: The SEK 15 billion program launches after Q1 results—timing and pace will signal management's conviction.
Defense ramp: Ekholm highlighted defense as a "sizable opportunity" but investments remain modest relative to overall R&D. Execution in this new vertical will be closely watched.
North American momentum: The company expects "healthy investment levels" to continue but noted carriers are signaling CapEx caution.
EU vendor restrictions: If Brussels moves forward on high-risk vendor rules, Ericsson could capture meaningful market share from Chinese competitors.
For investors in 5G infrastructure, Ericsson's first-ever buyback marks a confidence signal from a company that has spent years restructuring. The question now is whether the "hyper connectivity" thesis can translate into the sustained growth Ekholm envisions.
Ericsson ADRs trade on NASDAQ under the ticker ERIC.