Hello everyone, welcome to today's update. I'm terribly sorry about the delay. We had some severe technical problems here. Hopefully, it will work now, and you will be able to hear me in the beginning, and then you will be able to hear our CFO, Carl Mellander, and our Head of Networks, Fredrik Jejdling. The setup is that Carl will start with some discussion points together with Fredrik Jejdling. At the end of today's discussion, then we will open up for a Q&A. If you would like to ask questions, please call one of the numbers that you now can see on the screen, and press zero- one on your push-button phone. Please focus the questions around topics within the network business. With that, I would like to hand over to you, Carl, please. Thank you, Peter. Before we move on, given technical difficulties, please confirm that you hear me, Peter. Good. Okay. Fantastic. Great. Sorry again for this, let's go from now on immediately into the content. First of all, Fredrik, great to have you here to talk about networks. Okay, let me see if this works now. It seems that we still have a sound problem. There must be something very strange going on in the networks today. Not in the networks business as such. Okay. Today, Fredrik and I will discuss what is going on in the networks in Ericsson, including such factors as the market growth in different geographies, but also how we handle the development within ORAN virtualization. We will also discuss a little bit around, of course, the impact of COVID and what has changed, if anything, in the networks strategy, how we are tailoring product portfolio and some of the new items that we are launching right now. Hopefully, we will get to a really good Q&A, as Peter was saying, also, sooner rather than later. I can tell you that we still do have some technical issues here. Hopefully, we will get on stream very soon. Let me see if we now have Fredrik with us. Yes. Can you hear me, Carl? I can. Exactly, I can. Fantastic. Very good. It's better. Fredrik, great to have you here. Finally, it seems like this stuff is working for us. I wanted to dive in then, Fredrik, and talk about the market in different geographies. Now we've all seen the Dell'Oro's latest report. They're upgrading the growth for 2020. That's already a fact, but also the outlook for 2021. We saw 10% globally. Now it's the expectation, 12% North America, 9% Europe, for example. What's your view here on this increased prediction, and how do you see this pan out in the different geographies, Fredrik? No, thanks. I do sincerely hope that you can hear me, and apologies from my side as well. We are 23 minutes into it, but we'll do the very best out of it. Look, I think 5G, we're about 22, 24 months into 5G, Carl. I think as a technology, it is the fastest-growing generation of all technologies. That's typically the case. 4G was faster than 3G. When it comes to 5G, it's largely driven by the fact that it is happening across multiple continents at the same time. You have 4G started really in the U.S. with a select number of customers, and then it evolved. Here we have both China and U.S. and other geographies happening at the same time. That is one factor for stepping out quite significantly. The other one is that there is a multitude of an ecosystem developing much quicker than it did for 4G. Ultimately, that combined with the handset availability drives the technology, so to speak, in the early phases. Obviously, in general, we see a quicker uptake of 5G for that reason. Now, if we then look at the various, I think it's fair to say that it's fairly early on into the technology of 5G, and we see, of course, a mobility broadband case coming into play as a start. That's typically what we're used to. The consumer segment constitutes a major revenue to traffic today, but it was designed for industries, 5G, and that is also happening now. We see the digitization opportunity happening and growing much faster than the mobile broadband case, and that's why we designed 5G to take care of that opportunity. I would say that on the back of that, we see then, I would say, general upwards adjustments of the various in terms of the forecast, to your point then, Carl. We saw about 16% growth in 2020. If you take away China from that for a second, it'll be about 6%, 7% growth, and we grew about 10% in that market. Then you see 2021 growing about 10% expected. I think it is for the two reasons that you need an alternative for 4G for consumers, and we also see a long tail end then of 5G on the basis of now starting to see the results of building a digitized infrastructure based on 5G, and it becoming the critical infrastructure. Maybe a couple of points on the markets in North America is driven by an early high-band penetration compensating for or supporting the mobile broadband use case. We see a bigger uptake now on the back of the C-band or mid-band coming into the U.S. right now. We see North America growing about 12%. Europe is growing a little bit, and the good news in both these geographies, precisely expected 9%, I should say. In both these markets, we are taking market share, which of course, rewarding for us on the back of investments we do. China slowing down a little bit 2021 on the massive buildup that we see during 2020, a little bit north of 10. The other markets, India and Japan, Taiwan, coming through, and Korea we built about a year back. It is a technology that promises both the mobile broadband case, but the tail end of the technology is extended with the industry use case, I would say. Mm-hmm. That's great. I must say it's, of course, very encouraging for us to see how 5G is really picking up speed in more and more geographies. Still, as you say, it seems like we are only in the beginning actually of this cycle. Of course, the enterprise side of 5G we haven't really seen translating to so much business yet, but that's of course a big part of the entire case, yeah. Also, I think now we have one and a half year of pandemic and the impact of that on the global economy and on our society. Of course, we have seen how important connectivity is now during this period, more than ever before. I wonder, Fredrik, when you look at the strategy for networks then, has it changed, coming out of the experience from this pandemic time in 2020 and so on? Any changes that you have seen in your priorities or strategy going forward? No, I think in times like this, Carl, the health, and well-being of our employees that have to a very large extent been working from home, including Networks. We try to look at the positive experiences from that. Of course, we have manufacturing and hardware development personnel being on site, so we try to make their environment safe there. In terms of immediate factors, there is of course elements on the supply chain that we need to plan for. Lead times are longer. There have been lockdowns and both in service delivery as well as in planning for supply and manufacturing, we have to on extended lead times, we are buffering up inventories and we are also working with dual designs, not to sit in one geography with critical components. We work very heavily on that. That becomes more of a short term. I would say, Carl, that if you look at it, connectivity becomes an even more component of our daily life. Of course, COVID and the recovery beyond COVID will largely be supported by investing in infrastructure and the critical infrastructure that 5G constitutes. Now, from a strategic priorities perspective, if you look at it, because of course, we are here for the medium, long-term planning. I would say that short term, we have the same priorities as we discussed actually back, some of you might have been on Capital Markets Day back in 2017, where we talked about investing in technology for facilitating performance and cost leadership for our customers. We work on spectral efficiency, cost-efficient solutions driven by ASIC integrated circuit investments that we do. That we will continue working on. We will continue to selectively expand market based upon that competitiveness with our customers. With better technology, we'll also get a better cost structure ourselves, and that allows us then to take this market. Of course, our paradigm is to make sure that 5G could be run on 4G equipment very early on, and that paradigm continues. When we look at use case expansions that 5G offers, we want to do that with the most cost-effective way for our customers. Those three priorities, we stated them, little bit of variation 2016, 2017, and just we are continuing there. Yeah. Longer term, though, if I can just say two, three things, Carl, is that for us to be successful long term at Ericsson as an industry, we need to make sure that 5G becomes the enterprise connectivity platform. That's something we're working very hard on, as you know, and we talked about that at Capital Market Day last year on making that digitizing enterprise. To do that, we need to densify and make sure that 5G becomes the critical infrastructure on the back of COVID, but also for providing the 5G user experience that mid-band also offers. Thirdly, it has to do with in a world where architectures are driven in possibly a bit different ways, we need to make sure the standardization evolution of networks are harmonized over time. That's the third aspect we're working very hard on that will impact medium, long term for us. Right. In essence, the experience from this year has deepened basically the strategy that was set out, and it's proven even more relevant, I guess, for our customers and for us. Of course, a very big part of the turnaround of Ericsson has come out of networks. Not only, maybe I should say, but of course, it's a major part, and it really comes out of all the investments we have done in technology to regain world leadership, technology leadership, and so on. If we talk a little bit, given what you said on strategy now, a bit more on the product side, what is it that we win business on, would you say? Can you elaborate a little bit on the products and benefits they bring to customers? Yeah. Ultimately, that's what we're for. That's what we do in the market. I think, a basic foundation, as I said, has been our investment for technology leadership. I must say technology leadership could be slight self-serving and in the eyes of the beholder, and ultimately it's really only when our customers rank us techno-commercially number one, that's when me and my team discuss some level of technology leadership, because then we've done something good. Otherwise, it could be a bit self-admiring kind of a thing. We focus on that. To that point, then we have seen that we've been awarded then by 86 out of about 162 live network in 5G. We believe that, if you look at what we've done and the growth, we are currently at around 15% in Q1, clear for any currency, et cetera. It means that we have achieved a leading position on 5G. Why is that? A couple of areas where we have focused and that we will take forward, by the way, that is our choice of architecture and linked to that our development of what we now call Ericsson Silicon, system on a chip or whatever sort of name you want to apply for it. That allows us to build very efficient mid-band radio portfolio and baseband portfolio, allowing certain functions to be up in the radio head. That means that we get an uplink performance that is up to 10 dB higher than competitors. By putting that in play, you dimension a network to sell edge performance and the uplink performance translates into lesser sites and better performance on the edge. That together with further integration means that we also now launched a 6490 product, as we call it, and it weighs in at 90 kilos, and it has the power requirements of our customers and bandwidth requirements. I think that is based on architecture choice and proactive investments in ASIC capabilities, required then a couple of years back, and that was the ambition to look at the site and make sure that we can integrate passive active antennas and reduce the site presence to drive down cost for our customers and build better equipment for that. We're working a lot on our industry, let's say digitalization of our industries and the extension of service delivery to that, which becomes further completely automated and digitized flows. That drives the business leadership with our customer. This is how do we take forward. We've invested about SEK 10 billion in R&D. If you look at run rate 2020 over 2016, for that, we doubled our operating margin from about SEK 15 billion-SEK 30 billion. It has had a positive impact on our P&L as well. Definitely. One item here that you didn't talk so much about, but where I know customers are very eager and also the financial community, and that's around energy efficiency. Of course, it has to do with the entire sustainability agenda of the world and of us as a company and our customers. I know we're investing significant money there as well to break the energy curve and so on. What's your reflection there? What do we bring to the market, and how do the customers perceive? Yeah. Thanks, Carl. Thanks for putting that on the table. When you build integrated solutions like we do with system on a chip, it allows you to optimize the performance of any type of product, it being a radio baseband for energy performance. That means that it's of course environmentally sustainability important, but it also offer an attractive TCO profile for our customers, of course. If we compare then, we measure this in different ways and forms, both in a way of relative to competitors and in the sequence of how we introduce products on the market. We see that we've achieved around 30, 35% efficiency within ERS Ericsson Radio System on a chip portfolio over the previous generation. The target that we want to be 10 times more energy efficient per transferred 5G over 4G, so generation over generation then. We have reached a bit north bound of that now. If we then take the 6490 product I was talking about, then we achieve about 20% energy efficiency internally over the previous generation. That's our fourth generation of Massive MIMO product as such. That's why we have such a high cadence to get down into attractive customer cost and performance proposition. I would also say, Carl, that this is in a way what I described before now and what we talk about the energy efficiency part, that's history. There are shaping trends that we always look at when we try to define a portfolio as attractive for the future as well. For us, it's very much around geo supply chain. We talked about COVID being resilient in a world with longer lead times. That applies also for reasons like geopolitics, where we need to make sure that we can deal with any type of supply flow, depending on any sort of application of the world, in the sense that we need to be resilient to supply in any type of market. That's on top of COVID. We have the latest development around the surge in demand for semiconductors. We're also working very hard on making sure that we have enough inventory and buffers to deal with the various type of demand situations. I think that's important. Second part, which is important for us to work with, is what I spoke about before, new growth vectors, make sure 5G becomes the critical infrastructure. The third one, I would say, would be openness in cloud, where we launched our Cloud RAN platform end of last year, and we'll hear a lot more about that in the next period of time, I would say. That's important for us. It's a very promising technology for us for different use cases. These are just some of the things that for us to stay relevant, we cannot only look backwards, we need to look into and adjust and be ahead of the curve when it comes to other external impacting factors as well. Thanks. That's great. Now you touched on a couple of things that are among the frequently asked questions, I would say, that I also get, including semiconductor global shortage, you addressed that. Also the O-RAN. We should round off very soon to allow for questions. Maybe just one, when it comes to Open RAN virtualization and so on, sometimes there's a little bit of confusion perhaps around these different concepts. Can you quickly guide us a little bit, sort out the differences and how we are actually addressing the different areas? Yeah. No, it's a good question, Carl. Sometimes it is slightly confusing in the market and the terms are used interchangeably. Open RAN, it's not a standard, it's an industrial term, including various aspects, including cloudification, automation, and northbound in terms of orchestration and management. It also includes, call it an Open RAN internal interfaces. It's a lot of flavors to Open RAN. The ambition for it is to allow separation and disaggregation of hardware and software with open interoperable interfaces. What the market is looking for is supply chain diversity, solution flexibility and other capabilities, et cetera. We've been very active in developing and participating in what we call the virtualization through Cloud RAN. As I said before, we see that as a very promising technology. That, by the way, disaggregates hardware and software, and it allows also for an orchestration standardized, open orchestration management interfaces, call it a northbound, that we're very much participating on. We believe this technology deployed in various assets across various servers, various open private clouds, open public clouds, et cetera. It is a technology that offers a lot of evolution. I would say we've been part of the principle of openness and increasingly open architectures. Again, Cloud RAN is an evidence of that. As a leader over the past 145 years, we work with our customer, continue to innovate and respond to what they want, which is typically our high performing, energy efficient, secure networks. In some cases, integrated solutions are what's here and now that can offer that. There are other technologies very emerging. It becomes something with the urgency of 5G to be rolled out. That needs to be done with existing technology, which will ultimately form the critical part of national infrastructure, as I said before. Exactly. That's good to know. We are at the table. We are pushing development there as well and invest our own resources, of course, also in emerging technologies. While at the same time, we have more than 80 live networks now powered by Ericsson equipment, generating revenue for operators today. We shouldn't forget that as well. That's great. I think given the fact that we started so late, I think now we open up for questions and answers. Peter, please take it from here. Thank you so far, Fredrik. Let's hear if there are questions. Yes, I will unmute. We heard you for a second, then you went on mute, I think, Peter. Now you're on mute. We can't hear you, Peter. I hear Carl. Can you hear me now? Yes, now we hear you. It rains, of course, I was saying. No, I guess this was more a simple issue with the mute button. I've got to admit, I can't hear Peter. Okay, that's strange because I'm not unmuted. Let's see if you can hear all of us then. Let's start with the Q&A here. I think I have the first question here from Frank Maao from DNB. Frank, can you hear me? Yes, I can. Good, Frank. See now if it works. Frank, please, you are on the line, so you can ask your question. Okay. Thank you. Thanks for the opportunity. Well, Ericsson recently disclosed an additional risk factor related to the bond program relating to China. Not expecting you to comment on that, could you please remind us of what your comments have been in the past when it comes to the profitability profile of your sales in China? That investors can gauge the potential risk of potentially losing market share partially or entirely in the country. That's my first question. If you could comment on that, whether it's marginally positive but gradually increasing or whether or not it's closer to group levels at some stage here in a couple of years, that would be excellent. I'm referring to gross margins, actually. Secondly, on O-RAN, if you could comment on whether or not you see these reference designs for radios that have come out of the Qualcomm model and filings over the past half year as something that's shifting or accelerating the Open RAN or O-RAN space going forward with potentially more disruptive radio alternatives coming in with reasonably good specs that can be deployed. Thank you. Should I start, Carl? Do you want to go? Exactly. Thanks, Frank. I think if you take the O-RAN piece, if you like, I can also answer the China question. Yeah. Please go ahead, Fredrik. I can start with O-RAN. You're right, there is a multitude of reference designs coming out on the market. We should, however, see that there is a time to market aspect of this and the readiness of these types of solutions. If you look at the lower, they look at around 15% by 2025 of total volumes being O-RAN. There is an aspect of time here, and that goes back to the point that we have a 5G technology that constitutes critical infrastructure that we believe needs to be built outright at this point in time. That's on the O-RAN part. As I said, also that when we look at O-RAN, there are elements here that we are engaging with our customers on, and that is the Cloud RAN part of it, where we look at disaggregation of hardware and software being an important part. I think also over time, there is an aspect here of making sure that standards and interfaces are harmonized over time, to my previous point. That's important that we keep this industry together for global competitiveness. We all know what constitutes the basis of 8 billion connected devices. That has to do with one standard, one technology that everybody can scale and participate in. By the way, 3GPP offers that today. That's on that point. China, of course, Carl, shall I hand it over to you and you can take that? Yeah, I can do it. And thanks for the question, Frank. When it comes to specific profitability per region and so on, you know that we don't really go into much detail. What we have said, just to remind everyone, is that in the beginning of the 5G era in China, for us, we had challenging margins and even losses. We communicated that. Of course, we had a business case to turn that around, and that we also delivered on. The contracts that we are delivering on are generating profitability and are on track on our own internal business case. That's all good from that point of view. China, from a top-line point of view, as you know then probably it's about 8% of our total group turnover. Let's see. We communicated this risk. We wanted to say that the risk has increased given signals we pick up in the market, including what's stated in Chinese media and so on. That is not to say that something concrete has happened or that we have additional information. We will see how the upcoming tenders actually develop over time. Great, Carl. Thanks, Frank. We will move to the next question, and I think that one is from Alexandre Peterc at Société Générale. Alexandre, can you hear me? Yes, I can hear you well. Can you hear me? Great. Yes. Go ahead, Alexandre. Good. Excellent. Thank you. Can we just come back a little bit on the Samsung settlement? If you could tell us what is the current IPR run rate beyond the second quarter with the catch-up? What is the run rate that we should model going forward? How much is still there to be resolved in terms of ongoing IPR negotiations or disputes? Can we model at any point in the future a return to the SEK 2.5 billion per quarter in IPR or not? Thanks a lot. Thanks, Alexandre. I guess take that as well then, Fredrik, and let's see if there are additional questions on networks now that we have Fredrik here. On the IPR, yes, the run rate, if we look at the contracts now, if you use the numbers provided, you get to around SEK 6.6 billion. We have a couple of renewals ahead of us, as you know, under negotiation. They will then help close the gap back towards the SEK 10 billion level again. There's also a currency aspect, though, and let's say with a currency change of around 10%, that represents about SEK 1 billion of the SEK 10 billion actually downwards. The final point to mention there is this one particular variable contract we have on IPR, where volumes for that device manufacturer have gone down, and that impacts our revenue. Long term, of course, our ambition is to get back to the SEK 10 billion level and monetize our patent portfolio as good as we can. I think that what we can say, the Samsung agreement creates a good platform for the upcoming renegotiations on renewals as well. Thank you. Can I have a quick follow-up? Can I have a quick follow-up on networks as well, please? Yeah, that's good. Yeah. Did you see any impacts from what was going on in India on your development in the second quarter? My understanding was maybe that was one of the regions that was going to underpin growth quite a lot with a lot of rollouts in the current quarter. Did you see any impact there, or is the business as usual for you guys? Thanks a lot. We do see an impact given the rather tragic situation we are in India at this stage. The pandemic situation lockdown is impacting rollout services, and it slows down some of the ongoing project. It doesn't impact the overall strong belief in the future development of the Indian market. In the tragic set of events evolving there, although slightly better now than the last few days, it has impacted our rollout. Yeah, there has been an impact. Thanks, Alexandre, and thanks, Fredrik. We will move to Peter Kurt Nielsen at ABG. Peter Kurt, can you hear me? I can, Peter. Thank you. Thank you very much for doing this. Please go ahead. Thanks a lot. Just two quick questions, please. As you mentioned initially, market forecast for market growth has been raised quite significantly, including quite significantly lifted for North America, which is of course interesting. Can I ask, do you have any indications for seasonality here as to when this large incremental growth will come on? Looking particularly towards the end of the year, anything you can guide here, because it is quite a significant uplift. May I just ask, it sounds like Brazil is getting ready now for 5G spectrum auctions. How do you feel you're positioned to gain a part of those contracts in Brazil? Thank you. It's hard to judge exact seasonality within the year, to be honest. It depends on the C-band auctions have been completed, and of course, there's preparations for rollout now with all the major operators in the U.S. What we see as an external growth, as we said, is about 12% through Dell'Oro. It is on the basis of all the three preparing a mid-band rollout for better performance. That is very much on the basis of mid-band spectrum being available. That's the North American market. How that will fall between quarters, that is again a little bit different. U.S. is all three operators teaming up, of course, we need to make sure that their service delivery capabilities and the whole flow out to the market available. We guide overall that we of course want to beat the market, and the market in itself indicate about 12% growth then. That's the problem. Between quarters, it's hard to say, to be honest. We look at it a bit more substantially long term to build the business there. Brazil, also very important. I look quite positive on our abilities to gain a significant market share in Brazil. That is, of course, to be concluded. We have very good and strong relationships in Brazil and work very close to our operators and customers there. Hopefully we'll see the fruits of this throughout the year here. Thank you, Fredrik. Thank you. Thank you, Peter Kurt Nielsen. Now we'll actually move to the last question of this session as we have to conclude this at three o'clock sharp. That one is from François-Xavier Bouvignies at UBS. François, can you hear me? Yes, can you hear me? Yeah, we hear you perfect. Great. Thank you very much for the call and the opportunity. That's very helpful. My first quick question is on, Fredrik, your remark around the 5G, you said that it's the early stage of 5G. I think we can agree that 5G has been stronger than expected maybe in 2021, and the interest has been very high. Why you still think its early stage in 5G or any data point you can give to prove this? We could think that 5G maybe is more fit to rural instead of urban, at least, and maybe you can see a first phase. My question basically is how you see the saving on investment of 5G going forward after a first phase that is quite strong. The second question, Open RAN, and like you said, it's very confusing. You hear a lot of things, Rakuten is talking about 30%-40% cost saving in terms of n etwork. What's your view on the benefit on the cost side for your customer to adopt Open RAN? Beyond the readiness, what do you think the architecture can save to your customers? Thank you very much. Sure. If we look at why I mentioned 5G being early on, that's more linked to the fact that it actually was accelerated to start with. If we really look at Non-standalone, it was accelerated, so we actually launched 5G probably about a year earlier than we expected for the reason of bridging the mobile broadband case and facilitate the offload for 4G for that. In a way that is why we launched with Non-standalone quite early on. As I said before, also we designed 5G to connect the people with things and things with things. Those are the type of use cases we believe will extend the cycle of 5G investments in the market and is, as a matter of fact, the reason for becoming the critical infrastructure available with enterprise and mobility use cases. The technologies for providing that are linked to standalone. They are linked to the 5G core that then can facilitate end-to-end network slicing, for example, and those are the type of technologies we're deploying right now and see, by the way, very good results of as we trial those in various type of industrial use cases. In a way, what we've been 22, 24 months into 5G, it's largely been driven by mobile broadband and partly with fixed wireless access. Now we're stepping into the use cases in a very positive way for which 5G was designed. That's why I'm saying that it's still in the early phases of we actually ultimately designed 5G to take care of the networks. I hope that answers the first question. On 5G versus O-RAN, again, there is no doubt that if you build an integrated purpose-built system on a chip, that you're going to get the better performance and get the better cost profile in the network. What we're looking about, if we look, for example, at the introduction of Cloud RAN, that offers other opportunities. While they might not be so efficient on certain parameters on power consumption, for example, it offers the introduction of reutilizing a lot of hardware in the network. We believe that there are merits, and that's why we so forward-leaning on Cloud RAN, that there are applications in the network, call it then more hybrid-oriented, where these type of technologies like Cloud RAN and integrated solution will live side by side. It's also a dimension against what kind of use case you will actually deliver. There are complexities in the macro networks that require certain type of processing, thereby certain system on chips. While, for example, in industry application, it may well make a lot more sense to reutilize more cost-efficient existing product and installed base of servers or public cloud or whatever kind of edge solution the enterprise may have. It depends, and the only thing we can say is that we work with all these type of technologies to make sure that our customers get over time the best performing, most cost-efficient network. It's likely to take care of a couple of these type of technologies over time. That's, again, we drive certain aspects of Open RAN where we believe we will have a technology difference for our customers. We discuss architectures in great detail with our customers. A lot of, just final part here, a lot of the automation and orchestration and management function we actively support, which will give those type of performance advantages that typically the O-RAN community will talk about. Those are, technically speaking, A1, O1 interfaces going out into an open standard to manage and operate type of network. Again, as you said, it's a complex grade of components of this. We decipher what we believe will get the best performance and architecture for our customers, and that's what we focus on. It includes Cloud RAN, it will include integrated solutions as well. Over time, we will work with those two components ultimately to meet our customers' requirements. That's the most important thing for us. Thank you. Thank you, François. We are on the hour, and I would like to thank Carl for moderating this session and Fredrik for answering all the questions, both from Carl as well as during the Q&A. Again, I'm terribly sorry for the technology. Sometimes the technology is not on your side, but hopefully next time we will be on the lucky side of this. Please, thank you very much for listening today, and have a great day. Thank you. Thank you, guys. Thank you all.