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Nokia and Ericsson’s Baltic Battle a Barometer for the Future of 5G

September 4, 2018

This June, Finnish mobile giant Nokia’s shares plummeted almost 10% after missing profit predictions based on its 5G solutions. CEO Rajiv Suri claimed that the company’s fortunes would pick up in the second half of 2018, when carriers invest in the network infrastructure to make 5G packages attractive to customers.

Suri’s defiance isn’t baseless. Last week the EU threw Nokia a €500m ($580m) loan to develop 5G networks for Europe, in a bid to overturn the dominance of China and the US. It adds €4bn ($4.64bn) Nokia had already ringfenced for R&D, as it positions itself as the continent’s leading brand on superfast connectivity.

Nokia smartphones are, too, exceeding expectations, with the Nokia 9 soon to be unleashed on markets including China. That is a pleasingly far cry from the company’s recent releases in Europe, which have focused instead on reviving models like the 3310 and, bafflingly, the banana phone last loved by Neo in 1999 blockbuster The Matrix.

But if Suri’s tenure at Nokia has been characterized by a “stick to your guns and wait” attitude, that of his counterpart at Swedish firm Ericsson has been almost the polar opposite. When Borje Ekholm acceded his role last January he pleaded for patience, as Ericsson clawed its way out of a financial hole. The company has laid off 20,500 staff, put its media wing up for sale and, like Nokia, focused on the development and deployment of 5G networks.

Ekholm’s hustle paid off. After Q2 earnings Ericsson’s share price leapt 11%, and a 36.7% margin far outperformed the 35.2% analysts predicted. With a dedication to leading the new wave of data demand, his firm will be confident it can usurp Nokia as Europe’s top 5G firm.

It’s a Nordic battle with any number of plot points. Can Ekholm’s stripped-down team produce the results needed to win? Or will Nokia’s steady, growing output win the day? Does the EU’s backing of Nokia suggest that Brussels has already picked a winner? Ericsson’s radio access network (RAN) expertise has toppled Nokia in Germany. But outside that technology, Nokia outperforms in most KPIs.

Expect this battle of the Baltic Sea to go to the wire. There’s be plenty of bloody noses before a winner is crowned.

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Filed Under: Opinions, Top Story

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