Monday 8 June 2020 1:17 pm

Nokia boosts broadband arm as rival Ericsson flags 5G losses

Telecoms equipment giant Nokia has said it is seeing a pick-up in orders as providers seek to boost their broadband networks as global lockdown measures raise demand.

The coronavirus pandemic has left many people reliant on home broadband connections to continue working, putting a strain on networks.

Nokia’s president of fixed networks Sandy Motley said many of its customers had planned to grow their network by 30 per cent to 40 per cent over the next few years assuming a similar growth in traffic, but Covid-19 brought in that traffic growth overnight.

Read more: Delays to UK’s full-fibre broadband rollout ‘could cost £30bn’

“Customers will need to accelerate the growth that they had planned in the future, and we’ve seen customers already talking to us about that,” she told Reuters, adding orders for fixed networks rose 22 per cent in the first quarter.

Meanwhile Swedish rival Ericsson said today that it expects to take a second-quarter writedown of about 1 billion crowns (£85m) on its product inventory in China.

Reflecting high starting costs for new products, Ericsson said it expects negative gross margins in the region after winning 5G contracts from three major Chinese operators.

Read more: Security officials launch review into Huawei role in 5G network

It had previously warned in its first-quarter report that an increasing share of strategic contracts would hurt profitability in the current quarter, primarily due to its activity in China.

Ericsson today added that while the deployment of 5G in China will hurt in the short term, it is expected to have healthy profitability over the life of the contracts. It maintained its financial targets for 2020 and 2022.

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