Ericsson (ERIC) Last Update 11/23/23
% of Stock Price
Gross Profits
Free Cash Flow
Net Debt
5.9% $0.28
Trefis Price
Top Drivers for Period
Key Drivers
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TREFIS Analysis

Trefis Report
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Potential upside & downside to trefis price

Ericsson Company


  1. Networks constitute 86% of the Trefis price estimate for Ericsson's stock.


  1. Latest Earnings - Q3'2023

Ericsson posted a mixed set of Q3 2023 results as demand for 5G networking equipment eases, amid slowing capital spending by wireless carriers. Ericsson's revenue for the quarter declined by -5% year-over-year to SEK 64.5 billion ($6.14 billion), with adjusted net income coming in at SEK 1.4 billion ($130 million), down over 70% versus last year.


Below are key drivers of Ericsson’s value that present opportunities for upside or downside to the current Trefis price estimate:


  • Mobile Infrastructure Equipment Revenues: Ericsson leads the Mobile (Wireless) Infrastructure market. The division also contributes roughly 65% of the company’s revenues. We estimate that revenues will increase from levels of about $18.6 billion in 2022 to close to $20 billion by 2029, driven by spending on 5G equipment. However, if Ericsson is not able to achieve this, due to increased competition and its revenue drops to about $15 billion in the same time frame, there could be a downside of about 8% to our price estimate.
  • Networks EBITDA Margin: Margins for the networking division declined from levels of around 24% in 2015 to 14.7% in 2017, due to higher competition and declining demand in the broader wireless infrastructure market. The metric rose to about 20% by 2019, and 23% by 2022. We expect the metric to drop to levels of around 13% by the end of our review period. However, if the metric drops further to levels of 10% due to competition from Chinese players, who are betting big on 5G technology, there could be a downside of about 12% to our price estimate. On the other hand, if the company boosts margins to 18% by the end of our review period, there could be an upside of close to 10% to our price estimate.

For additional details, select a driver above or select a division from the interactive Trefis split for Ericsson at the top of the page.


Ericsson is a global telecommunications equipment and services provider based in Stockholm, Sweden. Operating in 180 countries, Ericsson is one of the leading suppliers of mobile networks with products in CDMA, WCDMA/3G, 4G/LTE, and now 5G technologies. It is also a strong player in Fixed-network solutions, including copper and fiber, microwave transport, and Internet Protocol. It boasts 33,000 patents from its 24,000 employee R&D unit. Ericsson is also one of the leading providers of IT services, such as systems integration, network, and consulting. It also has a significant presence in the Operations Support Systems (OSS), Business Support Systems (BSS) and m-commerce markets.



Accounting for over 65% of Ericsson’s overall revenues, Networks is the dominant division for the company. It is dominated by the Wireless division offering mobile communication equipment, including 3G and 4G/LTE solutions. Ericsson occupies the top spot in the global Wireless equipment market with about a 30% market share. It is positioned well to benefit from this $40 billion market over the short- to medium-term. The other products offered under this division are the fixed-line products for copper and fiber, microwave backhaul systems, and modems.


The 5G Upgrade Cycle

Operators across the world have started to outline plans for their 5G upgrades, with U.S. carriers commencing commercial deployments of the technology in 2018. For instance, AT&T and Verizon have deployed 5G mmWave services in over 30 markets by the end of 2019, while Verizon is bringing fixed 5G to homes in multiple U.S. cities. Other regions, including South Korea, China, Japan, and the Middle East, commenced their build-outs in 2019. Ericsson projects that there could be 3.5 billion “internet of things” connections on networks running 5G by 2023, with roughly 1 billion mobile customers, which translates to approximately 12% of total projected mobile subscriptions. Ericsson is betting on the next-generation technology to drive growth after posting mixed results over the last few years amid intense competition from Chinese equipment manufacturers and weaker spending by wireless carriers.

Equipment Modernization in Europe and Capacity Building in Asia

Ericsson’s mobile equipment modernization drive in Europe is likely to improve profitability due to increased efficiency and lower costs. Also, a gradual shift from coverage projects to capacity building projects is being done by the company. Increasing coverage in Asia, Europe, and Latin America have come at the cost of margins in the past couple of years, but as it reaches completion in the near term, profitability is expected to rise which will help counter the stiff competition being provided by Chinese manufacturers such as Huawei and ZTE.

Hardware to Software Shift in Telecommunications Market

There has been an industry-wide shift in demand from hardware networking solutions to software-based ones in the long run. This poses an interesting challenge to traditional hardware-based players such as Ericsson, Cisco, and Juniper. However, Ericsson is showing adaptability with its increased focus on software and support solutions, where it is competing with many small and local service providers.

Internet of things domain warming up

The IoT domain includes computing devices other than PCs, tablets, and phones. McKinsey estimates that IoT could have an impact of up to $6.2 trillion on the global economy by 2025. While these estimates may vary, they are in agreement regarding the huge potential of the market. Clearly, there is a lot of growth potential for network infrastructure companies such as Ericsson in addition to networking players and semiconductor companies.