As previously revealed by Ericsson (NASDAQ: ERIC) in its Q4 2020 financial report and in its 2020 annual report, there is a risk that the decision of the Post and Telecommunications Authority (PTS) to exclude products from Chinese suppliers from the 5G auction in Sweden could have a negative impact on the economic interests of Sweden and Swedish industry, including those of Ericsson.
This risk has been included in the risk factors in Ericsson’s EMTN prospectus. The update coincides with the issue proposed by Ericsson under the EMTN program and the change in the risk factor as noted in the Q4 report is reflected in the in italic text below.
Updated excerpt from the text of the Q4 report
Persistent geopolitical and business uncertainty related to a range of factors may have a material adverse effect on our business, operations, business prospects and, consequently, on our results of operations, financial conditions and our ability to achieve our Goals.
There are uncertainties over future bilateral trade relations between China and several countries due to restrictions placed on Chinese suppliers in domestic 5G networks.
In Sweden, the Post and Telecommunications Authority (PTS) has taken the decision to exclude products from Chinese sellers from the 5G auction. In this context, trade relations between Sweden and China are of particular importance to Ericsson, because Ericsson, although a global company with a presence in all world markets, is headquartered in Sweden and therefore risks collateral damage from a weakened Swede. Chinese relationship as a result of this decision. There is a risk that the above will lead to measures taken by China that target the economic interests of Sweden and Swedish industry, including those of Ericsson. Although Ericsson is invited to various ongoing tendering processes in China, the final outcome remains uncertain and the company currently believes there has been an increased risk that Ericsson will be awarded a share of these tenders in these tenders. market significantly lower than its current market share.
The geopolitical situation can have consequences for the entire industry, with an increased likelihood of further industry splitting, separation of global value chains and separation of global standards for mobile telecommunications. This global development has also led several countries to assess how to ensure uninterrupted access to the infrastructure of the telecommunication network, for example by promoting the disaggregation of the radio access network and by supporting the champions of the national communication network infrastructure. as an alternative to established global suppliers such as Ericsson, although the timing and extent of this situation remains uncertain.
All of the above may have a significant and potentially lasting negative impact on our business, including sales, market share, market access and supply chain and R&D activities, our financial condition and results. operating. “
Please also refer to the 2020 Annual Report for risk factors and uncertainties relevant to Ericsson and its business.
NOTES TO EDITORS:
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Ericsson empowers communications service providers to capture the full value of connectivity. The company’s portfolio spans networks, digital services, managed services and emerging businesses and is designed to help our clients go digital, increase efficiency and find new revenue streams. Ericsson’s investments in innovation have brought the benefits of telephony and mobile broadband to billions of people around the world. Ericsson shares are listed on Nasdaq Stockholm and Nasdaq New York. www.ericsson.com
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