Ericsson Capital Markets Day/ Part 2

Ericsson Capital Markets Day Part Two:

Networks summary:  When asked how it took market share (North American has 53% share 2Q20, up 5% vs 2018), management pointed to having made more significant R&D investments in radio than competitors. It cited Dynamic spectrum Sharing and its cost-efficient radio-related ASICs as examples of valuable features to customers.
The company expects O-RAN will continue to evolve, with limited uptake starting in 2023.  Cited IPR challenges as one challenge.  Elsewhere in the presentation, it said it is #1 contributor to 5G standards; we take it that this IPR gives Ericsson leverage to slow ‘O-RAN’ down.

Digital Services
The team said the split of Digital services for T4Q 3Q20 as (excluding IPR, consulting, and learning services):
•    BSS 20%
•    OSS 25%
•    Comm services 15%
•    Packet core 20%
•    Cloud and NFV infra 10%
The Digital Services team has:
•    addressed 37 of the 45 ‘critical and non-strategic’ projects
•    revised its BSS strategy, and it is now 5G focused
•    75% of its portfolio exposed to growth as of 3Q20 sales
•    Cloud infrastructure has 200 customers
•    5G Cloud core has 80 customers (includes “5G” EPC and 5GC SA contracts).  Packet core should grow faster than the others
•    5G SA count is now at 30.  5G SA revenues should begin in 2021 from most of these contracts.
•    BSS has 120 contracts, 9 of which were competitor swap-outs
•    Orchestration has 100 customers
Dig Services software + support in T4Q 3Q20 was about 55% of total revenues, and it expects 60% by 2022.  It has about 40% recurring revenue T4Q 3Q20 and expects it to be about 55% by 2022.  Expects Japanese and Korean operators to deploy SA by the end of 2021; expects Japanese 5G market to ramp very soon because it is a heavy user of iPhones.  It expects 600K 5G base stations in China in 2020 and the same number in 2021.
Emerging Markets Summary:
Recently acquired Cradlepoint has > 60% GM and a recurring revenue SaaS model.  200K enterprises, 3,000 public agencies, 1,500 channel partners.  It has won 30 dedicated network deals.