Competing with Huawei for 5G hegemony, Ericsson starts from regaining lost ground in Europe

Competing with Huawei for 5G hegemony, Ericsson starts from regaining lost ground in Europe

Huawei released its 2020 financial report. Although it continued to suffer unwarranted pressure from the United States, it still maintained a 3.8% business revenue growth, which was not easy. However, from the perspective of business segments, Huawei’s operator business growth rate is only 0.2%, which is not only lower than the company’s overall level, but also eclipsed by the 11.2% growth rate of its rival ZTE, which is quite surprising.

You must know that in 2020, China’s three major operators have invested in 5G network construction on a large scale, and their fixed asset investment (CAPEX) for mobile communication networks (including 4G and 5G) has increased from 112.1 billion yuan to 175.3 billion yuan, an increase of 56%. In this part of the investment, 5G wireless equipment, which has won the largest market share by Huawei and ZTE, accounts for the majority. Even Ericsson, which has a small success in the bidding of 5G equipment of Chinese operators, has its business income in China in 2020. It also increased by 18%.

Therefore, it can be inferred that the bleak performance of Huawei’s operator business in 2020 should be mainly affected by the decline in overseas markets, and the magnitude of the decline has already offset the 5G dividends in the domestic market.

On the other hand, Ericsson, Huawei’s biggest competitor, although its business revenue growth in 2020 is only 2.3%, it is mainly due to the strategic contraction of the management service business segment, which leads to a 12% decline in revenue. Ericsson directly competes with Huawei for the target network. The equipment business segment saw revenue growth of up to 7% in 2020, and the company’s overall operating profit margin achieved 12% in 2020, nearly 5 percentage points higher than Huawei’s 7.25%.

In terms of regional sectors, Ericsson’s business revenue in 2020 will grow the most rapidly in Northeast Asia. Thanks to the first large-scale 5G construction in the region, China, South Korea and Japan, the revenue growth rate is as high as 26%; followed by North America’s growth of 5 %. Revenue in the Middle East and Africa region declined 9% year over year, the largest decline, followed by a 6% decline in Europe and Latin America, mainly due to the impact of the COVID-19 pandemic.

It can be seen that the Chinese market, which is the first in the world to start the large-scale construction of 5G networks, will play a crucial role in the performance of Huawei and Ericsson in 2020. This can be seen intuitively from the statistics of the 5G base station market share in the fourth quarter of 2020 by industry consulting firm Omdia:

Competing with Huawei for 5G hegemony, Ericsson starts from regaining lost ground in Europe

Globally, Huawei ranks first with a 33.8% share, followed by Ericsson with 26.4%; however, excluding the Chinese market, Ericsson’s market share is as high as 38.6%, while Huawei has only 12%, which is even lower than Samsung.

It is foreseeable that in the Chinese market, which has a significant impact on the global 5G share, after completing the goal of advancing the construction of the 5G network, the three major operators are bound to rapidly reduce the scale of network construction investment; while in overseas markets, especially the European market, the relay will start. Large-scale 5G network construction.

So, whether the rhythm of 5G network construction in Chinese and foreign markets will affect the ranking changes of Huawei and Ericsson in 5G market share, and whether Huawei can always maintain the dominance of the first market share, will undoubtedly be one of the hot topics in the communication industry in 2021. one.

In this regard, the judgment given by LightCounting, a well-known consulting organization in the industry, is that Huawei’s overseas market prospects are expected to worsen from 2021, and Ericsson will benefit from it and may overtake Huawei in 5G market share. Moreover, LightCounting also published an article titled “Ericsson Eats Huawei’s European Wireless Market” based on its observations of the European mobile communications market, giving Huawei’s (and ZTE’s) European win over the 4G cycle over the past 10 years. The conclusion that the market is gradually being swallowed by Ericsson.

Competing with Huawei for 5G hegemony, Ericsson starts from regaining lost ground in Europe

By closely tracking Huawei’s global wireless market layout, LightCounting has determined that 40 telecom operators in Europe have not selected Huawei’s wireless equipment for their 5G networks, including subsidiaries of major groups such as Deutsche Telekom, Orange and Vodafone, as well as Including some second-tier and third-tier small operators.

These operators started 5G equipment selection in the second half of 2019, and by the end of 2020, Nokia won some of these 5G contracts, but there is no doubt that Ericsson has gained the most. LightCounting observed that Ericsson’s counter-offensive against Huawei’s 5G market started in northern Europe and spread to the Baltics and the Balkans.

In the Nordic market, Huawei’s reversal of the situation is like history repeating itself. In 2009, when the financial crisis triggered a global recession, Nordic operator TeliaSonera became the world’s first commercial 4G network based on Ericsson and Huawei wireless equipment. This is a milestone for Huawei to enter the Nordic market. Subsequently, Huawei has successively seized the market share of many subsidiaries of Telia and Telenor. In the same year, Net4Mobility, a joint venture operator of Tele2 and Telenor, chose Huawei’s equipment to launch a 4G network in Sweden, Ericsson’s home ground.

But 10 years later, Net4Mobility chose Ericsson and Nokia wireless equipment for its 5G network in Sweden, and Tele2 chose Ericsson to build a 5G network in Russia.

In 2013, Danish operator TDC made headlines when it chose Huawei to replace Ericsson’s wireless equipment. Now entering the 5G era, Ericsson has regained lost ground and successively won back the 5G network equipment supplier status of TDC in Denmark and Greenland, Elisa in Finland, Telia and Telenor in Norway, and Telenor in Denmark and Sweden. The wave of exclusion of Huawei’s 5G equipment in the Nordic market has set off a domino effect in the Baltic states.

In 2020, Estonia, along with Poland, signed a memorandum of understanding with the United States to ban Huawei, paving the way for the introduction of Ericsson equipment by three operators, Elisa, Tele2 and Telia, which operate mobile communications in its territory. Telia also decided to replace Huawei’s 4G equipment in Lithuania with Ericsson. Counting the 5G networks built by these operators in the Nordic and Baltic countries, they added more than a dozen 5G contracts to Ericsson between 2019 and 2020.

In the Balkans, Bulgaria, along with its regional neighbors Greece, Kosovo, North Macedonia, Romania and Slovenia, as well as Slovakia, signed a 5G security agreement with the United States in October 2020 as part of the so-called “clean network” manifesto. 5G networks without Huawei equipment are expected to be built in the Balkans soon.

Continuing westward along the European map from the Baltic Sea is Huawei’s big T site, where the Deutsche Telekom, Orange and Vodafone groups run about 45 mobile communication networks that may be replaced. Orange remains silent on the decision to replace Huawei. Although Deutsche Telekom and Vodafone have been loudly emphasizing that replacing Huawei’s 4G equipment will bring huge cost pressure to it, on 5G, the five major European operator giants Deutsche Telekom, Orange, Vodafone , Telecom Italia and Telefónica have all opted to build 5G networks in their home markets using equipment from Ericsson and Nokia. Deutsche Telekom and Vodafone are Huawei’s largest customers in Europe.

Huawei’s 4G equipment accounts for more than 50% of Deutsche Telekom’s European market share, and both Deutsche Telekom and its rivals Telefonica Deutschland and Vodafone Germany use Huawei’s 4G equipment in large numbers. Vodafone operates mobile communications services in Albania, the Czech Republic, Germany, Greece, Hungary, Ireland, Italy, Malta, the Netherlands, Portugal, Cyprus, Romania, Spain and the United Kingdom, and fully relies on Huawei in six of these markets. In Poland, Deutsche Telekom and Orange have opted to replace Huawei with Ericsson, and rival Polkomtel has also opted to use Ericsson equipment to build 5G networks. This reflects that the choice of 5G equipment suppliers by the five European giants also affects their second- and third-tier competitors. In Belgium, the Netherlands and Luxembourg, for example, Ericsson has grabbed 5G contracts. These three countries were originally Huawei’s 4G market sites, including operator Proximus’ 4G network in Belgium and Luxembourg and KPN’s 4G network in the Netherlands, all of which are completely dependent on Huawei. In this region, at least four 5G deals have gone to Ericsson.

From LightCounting’s market analysis above, it can be seen that Ericsson’s more than 40 5G contracts won in a very short period of time are actually a complete reversal of the 4G market landscape dominated by Huawei ten years ago; the final result is reflected in the consulting In terms of wireless revenue share in the European market according to the statistics of the agency DellO’ro: Ericsson is already very close to Huawei in 2020, and according to the current situation, it is very likely that it will overtake Huawei in 2021.

Competing with Huawei for 5G hegemony, Ericsson starts from regaining lost ground in Europe

Entering 2021, the European market will usher in a new round of 5G equipment supplier selection, and the 5G network construction of the five major European operators will expand outward from their home markets, which means that the competition for a new batch of 5G contracts will be Intensely unfold. However, the U.S. ban on Huawei has not loosened since the Biden administration took office. Even Huawei co-chairman Xu Zhijun admitted that he has no illusions about it. On the other hand, the Swedish government, which has always advertised its status as a neutral country, blatantly banned it on the grounds of security Huawei’s participation in the 5G construction in its domestic market will inevitably affect the 5G decisions of other European countries.

Competing with Huawei for 5G hegemony, Ericsson starts from regaining lost ground in Europe

Therefore, it is foreseeable that 5G contracts in the European market will increasingly fall into the hands of Ericsson and Nokia, and Huawei’s painstakingly managed wireless market in Europe will inevitably be further swallowed up. However, the changing situation in the European market will not only affect Huawei and Ericsson’s 5G hegemony.

Judging from the 5G network development trend predicted by the consulting agency Omdia, more than 150 5G networks will be built in the European market in the six years from 2019 to 2025. Due to the large number, its demonstration effect on the selection of 5G suppliers may also have a global impact. impact on other markets.

Competing with Huawei for 5G hegemony, Ericsson starts from regaining lost ground in Europe

Since Huawei cannot break through the North American market, after the European market is swallowed up by Ericsson, Huawei wants to maintain its market position as the No. 1 market share in 5G, and its competition with Ericsson will mainly be launched in the Asia-Pacific, Latin American, Middle East and African markets. However, in many countries in these markets, it is also the sphere of influence of the five major European operator giants to carry out global operations, especially in Latin America and Africa, Orange, Vodafone and Telefónica are still mainstream operators in many countries. The behavior of excluding Huawei in Europe is copied to the local 5G network construction, which will greatly affect the results of Ericsson and Huawei’s 5G hegemony.

Therefore, as a strategically important European market, in the 4G era, Huawei is the bridgehead for the global market. In the 5G era, will it become a Normandy for Ericsson to launch a counter-offensive campaign? Let time tell the answer!

Competing with Huawei for 5G hegemony, Ericsson starts from regaining lost ground in Europe

Huawei released its 2020 financial report. Although it continued to suffer unwarranted pressure from the United States, it still maintained a 3.8% business revenue growth, which was not easy. However, from the perspective of business segments, Huawei’s operator business growth rate is only 0.2%, which is not only lower than the company’s overall level, but also eclipsed by the 11.2% growth rate of its rival ZTE, which is quite surprising.

You must know that in 2020, China’s three major operators have invested in 5G network construction on a large scale, and their fixed asset investment (CAPEX) for mobile communication networks (including 4G and 5G) has increased from 112.1 billion yuan to 175.3 billion yuan, an increase of 56%. In this part of the investment, 5G wireless equipment, which has won the largest market share by Huawei and ZTE, accounts for the majority. Even Ericsson, which has a small success in the bidding of 5G equipment of Chinese operators, has its business income in China in 2020. It also increased by 18%.

Therefore, it can be inferred that the bleak performance of Huawei’s operator business in 2020 should be mainly affected by the decline in overseas markets, and the magnitude of the decline has already offset the 5G dividends in the domestic market.

On the other hand, Ericsson, Huawei’s biggest competitor, although its business revenue growth in 2020 is only 2.3%, it is mainly due to the strategic contraction of the management service business segment, which leads to a 12% decline in revenue. Ericsson directly competes with Huawei for the target network. The equipment business segment saw revenue growth of up to 7% in 2020, and the company’s overall operating profit margin achieved 12% in 2020, nearly 5 percentage points higher than Huawei’s 7.25%.

In terms of regional sectors, Ericsson’s business revenue in 2020 will grow the most rapidly in Northeast Asia. Thanks to the first large-scale 5G construction in the region, China, South Korea and Japan, the revenue growth rate is as high as 26%; followed by North America’s growth of 5 %. Revenue in the Middle East and Africa region declined 9% year over year, the largest decline, followed by a 6% decline in Europe and Latin America, mainly due to the impact of the COVID-19 pandemic.

It can be seen that the Chinese market, which is the first in the world to start the large-scale construction of 5G networks, will play a crucial role in the performance of Huawei and Ericsson in 2020. This can be seen intuitively from the statistics of the 5G base station market share in the fourth quarter of 2020 by industry consulting firm Omdia:

Competing with Huawei for 5G hegemony, Ericsson starts from regaining lost ground in Europe

Globally, Huawei ranks first with a 33.8% share, followed by Ericsson with 26.4%; however, excluding the Chinese market, Ericsson’s market share is as high as 38.6%, while Huawei has only 12%, which is even lower than Samsung.

It is foreseeable that in the Chinese market, which has a significant impact on the global 5G share, after completing the goal of advancing the construction of the 5G network, the three major operators are bound to rapidly reduce the scale of network construction investment; while in overseas markets, especially the European market, the relay will start. Large-scale 5G network construction.

So, whether the rhythm of 5G network construction in Chinese and foreign markets will affect the ranking changes of Huawei and Ericsson in 5G market share, and whether Huawei can always maintain the dominance of the first market share, will undoubtedly be one of the hot topics in the communication industry in 2021. one.

In this regard, the judgment given by LightCounting, a well-known consulting organization in the industry, is that Huawei’s overseas market prospects are expected to worsen from 2021, and Ericsson will benefit from it and may overtake Huawei in 5G market share. Moreover, LightCounting also published an article titled “Ericsson Eats Huawei’s European Wireless Market” based on its observations of the European mobile communications market, giving Huawei’s (and ZTE’s) European win over the 4G cycle over the past 10 years. The conclusion that the market is gradually being swallowed by Ericsson.

Competing with Huawei for 5G hegemony, Ericsson starts from regaining lost ground in Europe

By closely tracking Huawei’s global wireless market layout, LightCounting has determined that 40 telecom operators in Europe have not selected Huawei’s wireless equipment for their 5G networks, including subsidiaries of major groups such as Deutsche Telekom, Orange and Vodafone, as well as Including some second-tier and third-tier small operators.

These operators started 5G equipment selection in the second half of 2019, and by the end of 2020, Nokia won some of these 5G contracts, but there is no doubt that Ericsson has gained the most. LightCounting observed that Ericsson’s counter-offensive against Huawei’s 5G market started in northern Europe and spread to the Baltics and the Balkans.

In the Nordic market, Huawei’s reversal of the situation is like history repeating itself. In 2009, when the financial crisis triggered a global recession, Nordic operator TeliaSonera became the world’s first commercial 4G network based on Ericsson and Huawei wireless equipment. This is a milestone for Huawei to enter the Nordic market. Subsequently, Huawei has successively seized the market share of many subsidiaries of Telia and Telenor. In the same year, Net4Mobility, a joint venture operator of Tele2 and Telenor, chose Huawei’s equipment to launch a 4G network in Sweden, Ericsson’s home ground.

But 10 years later, Net4Mobility chose Ericsson and Nokia wireless equipment for its 5G network in Sweden, and Tele2 chose Ericsson to build a 5G network in Russia.

In 2013, Danish operator TDC made headlines when it chose Huawei to replace Ericsson’s wireless equipment. Now entering the 5G era, Ericsson has regained lost ground and successively won back the 5G network equipment supplier status of TDC in Denmark and Greenland, Elisa in Finland, Telia and Telenor in Norway, and Telenor in Denmark and Sweden. The wave of exclusion of Huawei’s 5G equipment in the Nordic market has set off a domino effect in the Baltic states.

In 2020, Estonia, along with Poland, signed a memorandum of understanding with the United States to ban Huawei, paving the way for the introduction of Ericsson equipment by three operators, Elisa, Tele2 and Telia, which operate mobile communications in its territory. Telia also decided to replace Huawei’s 4G equipment in Lithuania with Ericsson. Counting the 5G networks built by these operators in the Nordic and Baltic countries, they added more than a dozen 5G contracts to Ericsson between 2019 and 2020.

In the Balkans, Bulgaria, along with its regional neighbors Greece, Kosovo, North Macedonia, Romania and Slovenia, as well as Slovakia, signed a 5G security agreement with the United States in October 2020 as part of the so-called “clean network” manifesto. 5G networks without Huawei equipment are expected to be built in the Balkans soon.

Continuing westward along the European map from the Baltic Sea is Huawei’s big T site, where the Deutsche Telekom, Orange and Vodafone groups run about 45 mobile communication networks that may be replaced. Orange remains silent on the decision to replace Huawei. Although Deutsche Telekom and Vodafone have been loudly emphasizing that replacing Huawei’s 4G equipment will bring huge cost pressure to it, on 5G, the five major European operator giants Deutsche Telekom, Orange, Vodafone , Telecom Italia and Telefónica have all opted to build 5G networks in their home markets using equipment from Ericsson and Nokia. Deutsche Telekom and Vodafone are Huawei’s largest customers in Europe.

Huawei’s 4G equipment accounts for more than 50% of Deutsche Telekom’s European market share, and both Deutsche Telekom and its rivals Telefonica Deutschland and Vodafone Germany use Huawei’s 4G equipment in large numbers. Vodafone operates mobile communications services in Albania, the Czech Republic, Germany, Greece, Hungary, Ireland, Italy, Malta, the Netherlands, Portugal, Cyprus, Romania, Spain and the United Kingdom, and fully relies on Huawei in six of these markets. In Poland, Deutsche Telekom and Orange have opted to replace Huawei with Ericsson, and rival Polkomtel has also opted to use Ericsson equipment to build 5G networks. This reflects that the choice of 5G equipment suppliers by the five European giants also affects their second- and third-tier competitors. In Belgium, the Netherlands and Luxembourg, for example, Ericsson has grabbed 5G contracts. These three countries were originally Huawei’s 4G market sites, including operator Proximus’ 4G network in Belgium and Luxembourg and KPN’s 4G network in the Netherlands, all of which are completely dependent on Huawei. In this region, at least four 5G deals have gone to Ericsson.

From LightCounting’s market analysis above, it can be seen that Ericsson’s more than 40 5G contracts won in a very short period of time are actually a complete reversal of the 4G market landscape dominated by Huawei ten years ago; the final result is reflected in the consulting In terms of wireless revenue share in the European market according to the statistics of the agency DellO’ro: Ericsson is already very close to Huawei in 2020, and according to the current situation, it is very likely that it will overtake Huawei in 2021.

Competing with Huawei for 5G hegemony, Ericsson starts from regaining lost ground in Europe

Entering 2021, the European market will usher in a new round of 5G equipment supplier selection, and the 5G network construction of the five major European operators will expand outward from their home markets, which means that the competition for a new batch of 5G contracts will be Intensely unfold. However, the U.S. ban on Huawei has not loosened since the Biden administration took office. Even Huawei co-chairman Xu Zhijun admitted that he has no illusions about it. On the other hand, the Swedish government, which has always advertised its status as a neutral country, blatantly banned it on the grounds of security Huawei’s participation in the 5G construction in its domestic market will inevitably affect the 5G decisions of other European countries.

Competing with Huawei for 5G hegemony, Ericsson starts from regaining lost ground in Europe

Therefore, it is foreseeable that 5G contracts in the European market will increasingly fall into the hands of Ericsson and Nokia, and Huawei’s painstakingly managed wireless market in Europe will inevitably be further swallowed up. However, the changing situation in the European market will not only affect Huawei and Ericsson’s 5G hegemony.

Judging from the 5G network development trend predicted by the consulting agency Omdia, more than 150 5G networks will be built in the European market in the six years from 2019 to 2025. Due to the large number, its demonstration effect on the selection of 5G suppliers may also have a global impact. impact on other markets.

Competing with Huawei for 5G hegemony, Ericsson starts from regaining lost ground in Europe

Since Huawei cannot break through the North American market, after the European market is swallowed up by Ericsson, Huawei wants to maintain its market position as the No. 1 market share in 5G, and its competition with Ericsson will mainly be launched in the Asia-Pacific, Latin American, Middle East and African markets. However, in many countries in these markets, it is also the sphere of influence of the five major European operator giants to carry out global operations, especially in Latin America and Africa, Orange, Vodafone and Telefónica are still mainstream operators in many countries. The behavior of excluding Huawei in Europe is copied to the local 5G network construction, which will greatly affect the results of Ericsson and Huawei’s 5G hegemony.

Therefore, as a strategically important European market, in the 4G era, Huawei is the bridgehead for the global market. In the 5G era, will it become a Normandy for Ericsson to launch a counter-offensive campaign? Let time tell the answer!

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Author: Yoyokuo