Welcome to the Ericsson Business Update. Ladies and gentlemen, when would you like to ask a question, please press 01 on your telephone keypad. If you would like to decline from the polling process, please press 02. Peter Nyquist will now open the call. Hi all, welcome to this second call of two deep dives that we have had in recent week. Last week, we had the call from Jan Karlsson, Head of Digital Services, talking about the building blocks to reach profitability. There is a replay to be found on our web if you want to listen to that again. Today, however, we have our Head of Networks, Fredrik Jejdling, with us, and he's heading up Networks. He will talk about 5G and the RAN market. The purpose is that we will start with about a 30-minute-long presentation, and the rest of the hour we will spend on answering your questions. We would appreciate if you keep the questions around more the strategic topics around Networks rather than trying to model out the quarter. With that, I would like to hand over to you, Fredrik. Please, Fredrik. Thank you, Peter, hello, everybody online, good morning, good afternoon. I'll talk a little bit about largely three things today. First of all, wanted to recap a bit on the strategic summary that we presented about a year back in our Capital Markets Day at the time. It's relevant because those are the building blocks we move forward with as well here as we look out in time here in Networks. We'll touch upon the RAN market, how we see that and potential upsides to that market. Finally, our ambition and how we intend to compete in that market. If we move on then to the first slide here, I just wanted to take us back then a year and talk a little bit about our strategic priorities and takeaways. From you that were part of this a year back, this is from Capital Markets Day. We talked about, first of all, the most important activities we are conducting to reach our 2022 ambitions. They are investing in technology and cost leadership. That's the only way we can be relevant to our customers, to provide a better technology that provides a better performance and cost structure for our customers. That has the added benefit through the investments that we've done in technology. Also, our gross margin conducive to us. Based upon that gross margin improvement over the years, we then selectively increased our market share based upon that technology and advantage and thereby competitiveness that we reach in the market. We also want to help our customer then to take this. As you know, our hardware and software are expandable in that sense, so it could be expanded from very cost-effective expansion, leveraging the investments that have been done, whether that is radios for 4G that can be used for 5G and a more modular approach to expansion so that the network investments are sustainable over time for our customers. For those of you who remember, this is exactly, in some other words, what we talked about all the way back in 2017 as we met the first time presenting our new strategy. Those are activities that we'll continue to execute upon during this year and next year. We also introduced last time a couple of activities that are relevant for our long-term positioning, and it is linked also to the longevity then of the 5G cycle and our ability then to establish 5G SA connectivity platform for enterprise. We'll talk about that later on. We are in the earlier phase, I would say, of 5G build-out in many countries, and the important component of a well-performing, high-performing 5G network is the densification for mid-band, and that will then form the critical infrastructure the 5G constitutes. Thirdly, which is important in this geopolitical world as well as in a multi-technology world, is that we can lead and orchestrate the standardization and evolution of mobile networks to facilitate scale that has actually driven the adoption of eight billion subscriptions in the market to date. We also talked not only about the priorities, we also talked about the value creation of R&D that we have been, to that point in time, investing in. Here again, we have the shorter-term strategic priorities in the middle here. We talked at that point in time that we've added about SEK 10 billion in R&D. Starting then with an operating income from 2017 of SEK 15 billion. By adding SEK 10 billion R&D, we managed to get both then a market share growth from 32%-36%, driving a better top line and improving the percentage margin. That extra SEK 10 billion resulted in almost doubling of the operating income up until 2020. We also talked about, at that point in time, about we need to be attentive. When you're in the middle of an execution, so to speak, and we look at continued market leadership as a focus, we of course need to take with us what we've done well. Again, I'll get back to that a bit later on. There are some product architectural choices we've done. We acquired Kathrein a few years back, and we worked with making our services proposition a lot more intelligence driven. Those are items, those are areas we bring forward with us as we continue our execution. There are, of course, trends in the industry that we need to relate to and be proactive enough to land at a point out in time where we can be competitive over the longer term as well. Those are items like geo supply chain, our ability to both handle an east-west divided supply chain, but added to that came COVID situation and our ability to mitigate the impact of semiconductor shortage in the market. We need to be able to actively, practically drive growth across mid-band and across new segment for 5G. We need to relate to the openness architectural choices as well as cloud paradigm that is coming to the market. I'll get back to that later on as well. The key takeaways from the meeting a year back now is that Ericsson is in the lead of the 5G being the fastest-growing mobile generation ever. We will continue this for the benefit of our customers and ourselves. Thirdly, we take an orchestrating role in the evolution of mobile networks. If we look at where we are now a year later, here I want to, again, pick up a little bit on 5G as a phenomenon in the market and as a technology or generation of the mobile technology. Again, we see that its imprint on the world is even increasing. It's the fastest uptake of any mobile generation. There are a couple of reasons for that, and I would say it's accelerating, and we talked last week about this in our Ericsson Mobility Report, where we see already now about 660 million subscriptions by year-end. More importantly is that we see a forecasted growth up to 4.4 billion by 2027. The uptake is linked to a couple of reasons. For those of you around 10 years back, in 4G, it largely was a pickup in one continent in the U.S., and then it spread, so to speak, across. 5G, due to the demands of mobile broadband initially, made the sort of all three main continents on the slide here to pick up more or less at the same time, with some differences. That combined with above 1,000 5G-ready devices, that made for a quick pickup, and also we see that the handset cost has decreased quicker on 5G than on 4G, meaning that it's been a greater pickup. That's on the market side of 5G. We look at what we have done here as a company, again, a year later to capture market days. We have about 182 live networks globally, we are pleased to see that we have reached 105 out of those allocated to Ericsson, awarded to Ericsson, I should say. We attribute that to the investments that we've done for our customers' competitiveness. Technology leadership, in our view, needs to be seen in the eyes of the customer. When we have the opportunity to end up number one in their techno-commercial rankings, then I think we have an opportunity to claim some technology leadership. If that is in 105 out of 182, that's a good position to be in in 5G for us. We've also been recognized globally on the Gartner and the Frost Radar being a 5G leader, both on innovativeness and ability to execute. We see also due to some choices we made on the product in terms of larger hardware architecture investment in ASICs, application-specific integrated circuits, is that once we swap competitors, we do deliver a much better performance. We see in South Korea, post-swap performance being downlink about 68% and uplink +163%. That is linked to a better uplink performance of our radio and the radio performance in-field. With that in mind then, how do we see now going forward from where we are now, end of 2021, looking ahead? The rest of the presentation will focus on two areas. Number one, the market development. Number two, our ambition in that market development. If we look at the graph here, we see the top gray bar showing the global market as defined, the radio access network market as defined by Dell'Oro. We see it with and without China. If we take without China, and naturally, we look at that given our latest market share in China, the outside of China becomes more relevant from a market perspective for us to look at. Then we see that we, from now on, have about a CAGR of 3% up until 2025. Our own growth in that has then been, again, market share outside China from 2018 as we started talking about this strategy, from 33% up to 39%. Our ambition is that we want to continue outgrowing the market and continue this market share expansion in a slightly growing CAGR for the global market, excluding China. If we now go in and look at number one then, the market development here, how do we see that? Let me first make the point that now this is a bit of a compressed slide from 2010 up to 2020. We wanted to show the latter end of the cycle here. It is so that even if we look at the lower forecast, we see a higher peak naturally here of the 5G cycle, but we also see a forecasted extended cycle. That is because, to the next slide here, 5G is to scale in most markets. We again see then a strong pickup from about 660 million up to 4.4 billion subscribers by end of 2027. That means we're going from a 25% population coverage up to 75% population coverage by 2027. There is a massive growth of traffic up by more than 400% in networks also during the same time. That, to us, represents an extended cycle of investment, as shown by the Dell'Oro on the previous slide. We expect that the cycle to be, let's say, about a year and a half longer than 4G, if you compare the graphs. Again, the height being higher than the 4G level of investments. You could always argue forecasts, et cetera. We do see when we look at this, beyond what was shown on the previous slide, we see certain potential upsides that could, of course, extend then the 5G investment cycle, and one of them is being mid-band densification. We can take a couple of markets where mid-band coverage has come a little bit further, and those would be Korea, it would be one or two markets, maybe in Europe and China. A large part of Europe, a large part of the U.S. still remain to build mid-band coverage. The situation is such that in order to deliver the 5G performance in terms of capacity and latency, there is a mid-band coverage expectation, or there is a performance expectation that can be delivered to consumers in the industry through a mid-band network. The key takeaway is that the market will require high-performing, energy-efficient, Massive MIMO radios that are easy to deploy over the next few years. That is more in the existing mobile broadband area, so to speak. We believe there are potential upsides also in looking at the consumer and enterprise opportunity. We looked at a couple of parts here because, of course, it's interesting to understand what is the use cases we see beyond the mobile broadband use case. To start with, we see a significant uptake on Fixed Wireless Access, forecasted revenues of about SEK 57 billion by 2027. That would probably represent about a 3% growth on top of current levels attributed then to Fixed Wireless Access. We think about 20% of the traffic in the networks would be Fixed Wireless Access by 2027. We also see, of course, a lot of immersive media coming along, that is driven partly by the earlier discussed mid-band densification coverage that gives the opportunity to enjoy VR gaming, automotive, and educational services. Last but not least, and I'll get back to this as well, that we see enterprise use cases taking off. There is a significant potential. SEK 57 billion is from our Ericsson Mobility Report related to Fixed Wireless Access. Of course, SEK 700 billion is a big potential that we talked about earlier presentations. That represent the bigger enterprise opportunity addressable by our customers. When it comes to consumer and enterprise opportunity here, we still are in early adoption of 5G in consumer and enterprise. We see that with a major potential coming. We go quickly along some of the-- Just to break it down on a more regional level. I want to pick up on a couple of things. First of all, we see, of course, a massive mobile data traffic growth per region that we talked about on the previous slide. There are a couple of markets that are particularly interesting when it comes to this early discussed buckets around mid-band enterprise and Fixed Wireless Access. One of them is North America, where we have previously seen, with the exception of one of the CSP there, due to the unavailable mid-band spectrum that's now been auctioned out and now being rolled out, we see a big uptake of that coming along here. It's very important for 5G success in the U.S., and it's a mid-band perfectly suited to deliver the capacity and coverage in the U.S. We expect U.S. operator to continue build a good mid-band Massive MIMO network layer. We see that growth rate shown also by the Dell'Oro for 2021 and 2022. We see about 15% growth in 2021 and some growth continuing there, about 3% continuing to 2023. That's the North American market, a big market coming along with the big mid-band deployment. Europe has been a little bit slower, we must say that early on. COVID, thereby also delayed spectrum allocations. I would also say that some European operators a harder time than others to see the business case for building 5G due to some of the regulatory issues in Europe. We see post-COVID a strong activity with accelerating investments across Europe, including France, Germany, U.K., and the Nordics. India is also worth mentioning. We got three, four big players in India, at least three, and 5G, however, being delayed a little bit. The auction probably happened somewhere in May with deployment towards, let's say, end of the year, mid-end of the year. We see a strong uptake as always in the markets as we can see there by 414%. That's, of course, driven by the unavailability of, or non-availability, I would say, of fixed-line communication largely, as shown by Jio. That's a little bit the regional perspective. If we then scroll down a little bit and look at if that was the market as such, again, the extended cycle is linked to 5G get to scale. We see upsides in mid-band densification in the market. We see a consumer enterprise opportunity with the possibility of extending the cycle. We need to think about what we do there. As we said many times before here, we have an ambition to continue to outgrow the market here, and we do that within 4 categories. It goes back again to the Capital Markets Days and even back to the start of this new strategy a few years back, that we'll continue investing in technology leadership for cost and performance. We need to make our customers more successful utilizing our equipment than our competitors. That is based upon a cost per gigabit per second of performance premise. I get back to some of the portfolio that has offered that to our customers. We, as we said, will continue work on market share gain based upon the technology and competitiveness. I got to be honest and humble here and say that we have a very sophisticated customer base, and they are very good at choosing the right and the best technology in the market. Again, that's why it's so important that we are ahead of the curve in investing technology that make our customers competitive. We have two parts here that we spend a little bit more time on today, and that is strengthen the global supply chain resilience. We believe that investing in supply chain, enabling our customers to drive their revenue has become a competitive advantage. We spent quite a lot of time both in a geo-divided environment as well as in a constrained component environment to facilitate or generate the ability to supply to our customers during this pandemic and supply chain shortage crisis. The last part, which is becoming a very important part for our customers, is our ability then to support our customers in their Net Zero carbon footprint premise. If we look then at a little bit historical thing here over the past year, what we've done to strengthen our industry leading portfolio. Here I would start with the two boxes here, where we also have a circle, and that is our latest Massive MIMO introduction on the market. As early as January, we introduced based upon an architecture allowing more processing to happen up in the radio, facilitating a 7 dB performance advantage. For anyone that does radio planning, that's an enormous advantage in footprint and cell edge performance, throughput performance, allowing for a more cost-efficient build-out. What we also did with this one is that we have a higher level of integration in our ASIC, in the new ASIC, allowing ourselves to reduce weight and size down to about 19 kilograms for a Massive MIMO 64 branch radio. A few weeks back, or a few months already now, September, we did a similar thing here, as can be seen in the bottom row, almost to the right. We launched in a similar 32 branch radio, and that weighed in at 12 kilograms. By the introduction of this product, we've taken a firm leadership in the market on the most important segment for building out 5G, which is Massive MIMO. Here we've continued the integration on the ASIC level, but we also applied a completely different building practice, integrating a lot more functionalities onto one board, including radio, antennas, filters, et cetera. That allowed for weight around 12 kilograms on the market. What fuels this is largely our investment in Ericsson Silicon, and that is our specific circuits that we design and build together with partners, largely in the U.S. We have recruited about, let's say about 200 people in Austin, Texas, which typically has a lot of these capabilities available. That has allowed us the choices we made there and the level of integration and the ones we build both in the baseband, up in the radio, has allowed us to drive the technology forward, where actually performance matters. The last point I wanted to talk about here is the Cloud RAN. About a year back, we started talking, introducing Cloud RAN. About half a year back, we introduced Cloud RAN for the mid-band, including accelerators, including being able to meet quite high demand in mid-band use cases. This is a very important addition to our portfolio as it facilitates a more flexible deployment of compute in the network. It can be deployed on any service structure, any public or private cloud. We believe this flexibility and scalability of this solution will allow us to work practically in the macro networks with our customers, but also utilize as a way also to provide 5G into enterprises, as was one of our longer-term promises, as we spoke about in Capital Markets Day last time. I just wanted to reflect on those portfolio items that we've delivered over the last year. We remain very focused on continuing that development, again, because having the best, most cost-efficient technology for the customers and for us is what we want to continue working on as we've been doing over the past four years strategically. I wanted to take a quick check also on the enterprise business. Again, when we introduced the acquisition of Vonage, we talked about our company strategy, and what I've essentially talked about is the top left-hand part here about extending leadership in mobile networks. That's the base. That's the core of our business. Again, the strategy is again repeated here. What is important for us as a company is expansion into enterprise. Why is that important for networks then? For a couple of reasons. First of all, if we look at enterprise wireless networks, the solutions we look at there when it comes to dedicated networks, i.e., private networks, and mission-critical mobile networks, there's a full reutilization in there of the products that we developed for the macro network, i.e., for the mobile networks on the top of the slide. What is also very important is when you start getting a network platform like the Vonage acquisition that we did, it offers exposure to networks northbound, i.e., creating APIs that connect enterprises and consumers for that matter, but largely enterprises then to the 5G networks. That is critical for us because 5G will develop network features and functionalities that are different to those of 4G. Our ability then to utilize Vonage to bring those capabilities up, whether that's slicing or whatever it might be, up to enterprises in a way that allows both the CSPs and ourselves to capitalize on that more relative to the 4G generation, that's an important part of the Vonage acquisition. What that also does, what both enterprise wireless networks as well as global network platform does, is that it actually, over time, also increases the need for investment in the mobile networks as such. We have to drink our own Kool-Aid, of course. When it comes to putting in 5G in enterprises, as you know, we have a smart factory in the U.S. up and running. We, of course, connected that factory to 5G. Through Industry 4.0 applications, we have around 25 use cases that we applied in the factory. We see a tremendous amount of improvement in the productivity and output per employee, even up to factor 2.2. We see also a reduction in material handling and both energy consumption and the most important thing here from a sustainability perspective is that it's 100% renewable energy. Some of the use cases we're looking at here is 5G-connected automated guided vehicles. We train our people through 5G remotely. More predominantly, we have the ability to bring up the productivity in the production chain by actually lifting up some network functionalities in local clouds as opposed to have it distributed out in the whole environment, allowing then for better flexibility. Two more points before we get into Q&A. I mentioned before that business continuity has become a key priority in line of two recent externalities. One of them is being the geo supply in the sense that we saw fairly early on when ZTE was actually entity listed about three years back, after Huawei. We were concerned about repercussions, and we needed to build integrity into an Eastern and Western supply chain. We made significant investments in electronics to be able to supply that outside of the, to be straightforward, the China ecosystem, to create a redundancy and being able to supply from a geo divide perspective disregarding what would happen. What we saw then was the pandemic coming along. It's almost two years by now. We recognized that we probably need to practically work on two things, design and redesign of radios, and we probably need to think about buffering or stocking up components so that we can allow ourselves the time for that redesign, because there's a lead time to that. That was a large action related to COVID. Early last year, we fairly early on saw that the semiconductor supply was not in line with the demand on the market. We quite early worked practically with our semiconductor partners to try to secure supply, although the demand was higher than the supply. We worked a lot on booking wafers, booking capacities, reserving capacities to make sure that we're resilient in even the critical semiconductor chain. All in all, we see that we've been performing quite well in this area. There were some issues, as we said in the Q3 report, regarding some components coming late into the quarter. We have to continue controlled and work on the situation and handle the situation. We're working very hard with both our customers and the supply chain to make sure that we meet our customers' demand. The last part I want to mention, trying to keep to the 30-minute schedule here, is around sustainability. Sustainability is important. Of course, needless to say, we get a lot of demands on our customers for sustainable solutions. It's also fair to say that if we want to impact society, there's probably a few businesses that can have that level of opportunity to do so. As an industry, the telecom sector, ICT sector, utilizes as a carbon footprint of about 1.5%, but we can impact, to the bottom right-hand side of the slide, about 15% in other sectors' emissions, it being travel, industry, and so forth and so on. The impact of what we do has a significant part of other industries, of course. We have an internal ambition here to be Net Zero, as we can see on our own activities here, by 2030. In all honesty, that's a very small part, single-digit percent of what we actually generate as a carbon footprint. What is more important for us to focus on is the supply chain and portfolio. What we actually put out on the site, on ground, that represent about 80% of Ericsson's footprint, a little bit more than 80%. Around 15%-20% relates to the supply chain in terms of carbon footprint. That means that our focus is about making sure that our supply chain, that we put the correct requirements in terms of our customer's commitment to the Paris Agreement-- Sorry, our suppliers' commitment to the Paris Agreement, so that we can recommit that back to our customers. The choices of material we do in the supply chain, the way we build carbon neutral factories like in Lewisville, et cetera. We are structurally walking through in a very robust way, the way we structure the supply chain for decreasing and halving the emissions by 2030. The last part, which is very important, which we are partnering with our customers on, is to see that what we actually put out there in terms of hardware and software, needs to be able to halve emissions by 2030. This is where about 80% of Ericsson's carbon footprint gets generated. Here, our latest evolution in Massive MIMO and let's say about 25%-30% energy efficiency generation over generation, as well as some of our software development features. Our ability to design for sustainability, both on hardware and software, will determine our ability then to ultimately break the energy curve in making the 4G or the 5G network absolutely lesser footprint than the 4G networks. This is a very important work for us, both from the perspective of society and the way we can contribute as an industry and Ericsson as a company. Just to round off, key takeaways, in a way, quite similar to where we were a year back. The strategy we introduced 2017, updated last year, updated today, remains, and we are on track execution-wise towards our ambitions. We are established now in a market-leading position with the best-in-class portfolio. It's also important for us that we stay focused, humbled, and grateful, of course, for the opportunities being offered from our customers and the awards. It's equally as important that we look forward, taking the externalities in play and the continued investment level to stay ahead with our customers, enabling a better, again, a more gross margin conducive, positive conducive portfolio. Capitalize on the full 5G opportunity, also in Fixed Wireless Access and enterprises beyond the mobile broadband case. With that, I hand back to Peter for some questions. Thank you, Fredrik. We are now ready for questions. Simon, can you open up the queue? Yes, thank you. If you would like to ask a question, please press 01 on your telephone keypad. If you wish to withdraw your question, you may do so by pressing 02 to cancel. Our first question comes from Daniel Djurberg with. Please go ahead. Thank you so much, operator. Yes, can you hear me? We hear you perfectly. That's great. Thank you so much for this opportunity, and thank you, Fredrik, for the interesting update. I think I will start on the semiconductor shortage impact. Thank you for the update there. So far, impacting Q3 negative, and we shouldn't talk too much about Q3, I guess. Any lesson learned in terms of have you seen mainly deferrals rather than cancellations? If you could say anything on the operational impact on the semiconductors shortage. Thank you. Well, first of all, I think we've been proactive in trying to work through, as I said already, from beginning of last year. We are already now booking up, let's call it both capacities on the semiconductor side, but we need also to ensure that the lanes, actually, the distribution lanes are also made available for us. We also make investments in that to facilitate the whole chain because we need to eliminate the weakest link. The Q3 issue was a result of a fragile, complete total chain that shows vulnerabilities. We try to eliminate those by being proactive, and I think when we look at Q3, we continue to control and handle that situation. How it will impact next quarter is hard to predict, but we continue to make the proactive measures and work close to our customers and suppliers. We want to make sure we can meet our customers' demand for this year and next year as well, of course. Thank you so much. I guess it's one question each, or? Well, if you have another question, you could- Yeah You could ask that as well. On the Federal Aviation Administration impact from the C-band deployment. We learned about 30 days delays or something. Is that impacting your business as well, or is it more for the operators that they would see a delay or taking down the tower close to the airports? No, we see that we are able to manage that situation for us, and we don't expect to see a further delay. There is a strong support from the administration to get 5G out in the market, and the industry, including ourselves, are working with FAA and FCC to resolve the matter. It's also so that operators have entered into agreement with FCC to modify some of the deployment guidelines around airports until June 2022. We believe this will allow the deployments to continue without any delays. Thanks, Eric, and thank you, Jonas. Thank you. We have next question from Frank Maurer. Hi, Frank. Hi, how are you? Thank you for taking the question. We are fine. Thank you for hosting this helpful call once again. My question is relating, Fredrik, to the Ericsson Silicon, and also your ambitions for market share gains and ability to do that through this in a competitive fab, TSMC and so on, and haven't really had that for over a year. Firms ask access to the same production facility. Also mentioned that your customers are very smart with regards to recognizing the best technology and best technology roadmaps when they now make their choices for the 5G era. Can you speak to how attentive you feel that customers are really in your dialogues with them with regards to the importance of having access to the best technology? If you're sensing that any lack of this will really lead CSP to potentially make voluntary swaps for that matter, in order to have high performance and energy efficient mid-band performance for the next few years. The ASIC component defines largely the way we can build cost-effective, energy-efficient radios and basebands and the level of integration there facilitates that. TCO basis and the higher level of integration, the more forward-leaning you are in that, the better typically you come out in those rankings. I would say that as an output of focusing on differentiating our product for cost and performance, that has given us an advantage in technocommercial evaluation with our customers. I would think that together with, of course, overall good customer relationships, that has given us the opportunity to take these markets up from 33% up to 39%. It's a very important component on competitiveness. There are other factors in there as well, of course, but it's an important part. Again, this business has changed quite significantly when it comes to differentiation and the ability to differentiate. It's only 10 years back, you had a 2 2T2R radio, maybe 1 TDD, FDD, and the premise was to deliver upon cost reductions on that over time. Now it's far more around facilitating a cost per gigabit, a production cost for a customer that is far more attractive, and that is driven largely by these type of investments. I would say that concretely, that has allowed us to take a leading position. I would also commercially say, making wrong decisions in this area is also quite costly for the performance, because then you have to work with programmable devices in the radios, which typically doesn't give the same performance, neither in coverage or cost. Huawei, I can't really comment on that. What I can say generally that if you have a lack of accessibility to leading-edge nodal density, then you have to work a lot more with software investment to try to compensate that. What I say, compared to competitors on ground in the market today, we see a performance advantage on the mid-band radio driven by this. I don't know if that answers your question, Frank. Yeah. Anything? Thanks. I think that is as far as it go, I guess. If I may, a very short follow-up here. Can you comment on- No problem when you expect your ASICs to transition to five nanometer process node technology? We don't really comment on that, but I can say it's in the pipeline. Okay. Thank you. Thank you, Frank. We have the next question from Simon Leopold at Raymond James. Hi, Simon. Hi. Thanks for doing this call, and thanks for taking the question. Hopefully, I can sneak two in. The first one I wanted to ask was, what's your take on the group of European operators urging for government support for Open RAN? What are the implications, if any, for Ericsson? Look, we work very closely with all our operators, European operators and global operators. I think in the case of Europe, there is a question of vendor diversity that they're looking at, and there's a case for innovation. Of course, we work very much with our customers on Open RAN solutions such as Cloud RAN and automation on top of that with our SMO platform, et cetera. Look, when it comes to the future, then if we look at architectures and structures over time, we work together with our customers and partners over to harmonize and make sure that we can keep these architectures and standards global over time to facilitate the scale in the industry. There we work closely with all our European and global operators to facilitate that over time. It's likely that those type of interfaces become more open over time, and that's something worth we support. We got to remember that, as a leader in the telecoms, we have to continue innovate and be responding to what our customers want. At this stage, 5G is defined by the products that are here at the market right now that are energy efficient, secure, and work on open interoperability standards. We are very much working together with our European customers as well to define the environment which we compete in over the future. Thank you. Sorry, you had a second question. Yeah. Yes, please. Yeah. I'm trying to gain a better understanding of how Ericsson's business would trend when operators move to densification for mid-band. Specifically, what I'm pondering is that a large proportion of the operator spending will go to capitalized labor and installation during that densification phase, and therefore, a lower proportion of spending is available for radios. Does this mean that we have to see operators spend more money overall for Ericsson to grow during the densification phase? Thank you. I think, I'm not sure I quite got the question, but if you densify a network, you would largely reuse the existing site infrastructure, or you would utilize the installed grid. Typically, you look in a city, you have a site-to-site distance of, let's say three, 400 meters, an example. You can largely reutilize those type of deployments scenarios. What we try to do here is combine them with a product. We try to make it as cost-efficient as possible in the service layer or in the services as such to get it up and mount it on the site. That's why we think it's important to build radios that, for example, weigh 12 kilos because they make the deployment, installation, integration, so much simpler and easier. Of course, the way we design and build our products should allow for lesser spend on the concrete and cement, call it that, and the steel, and allow for more money to be spent on actual 5G capacity onto on the mid-band. That's helpful. Thank you. Thanks, Simon. Next question is from Peter Kurt Nielsen at ABG. Hello, Peter Kurt. Hello, Peter. Hello, Fredrik. Thanks again for this. Hello. Very useful. A question related to your initial comments on competitiveness and market share gains that, which I guess to date has mainly been based on non-standalone 5G. My question relates to how confident and supportive you feel that you can maintain that. We had a very positive presentation by Jan Karlsson last week, as you know, outlining Ericsson's lead in 5G Core. How important is that for you to maintain technology leadership and further market share gains? How important is digital services in this respect? What are the synergies here? Thank you. Yeah. No, look, I think you're right, first of all, that the initial deployments have been around NSA and now coming in with the core SA portfolio, dual-mode 5G Core that Jan is driving. That has the impact, of course, that the networks get utilized more for what they were built for, which is the full enterprise use case, connecting things with things and things with people. That's, of course, an important aspect. I would also like to say that our ability to continue investing in the network segment and continue to be a leader there, and as I said in the beginning, maintaining the competitiveness for our customers through investment is fundamental to keep on increasing, as I said, our market share. We have an ambition to increase market share subsequently also from the 39% we have today. Continued investment to stay ahead is fundamental for us. There is, of course, an element that when you build a 5G dual-mode 5G Core combined with an Ericsson 5G networks, you also have the opportunity as a customer to explore the full 5G opportunity, which in itself is an important catalyst for further investment because it realizes some of the enterprise use cases that we're looking at. Perfect. Thank you for that. Thank you, Peter Kurt. We'll move to Alexandre Duval at Societe Generale. Hello, Alexandre. Hello. Hi. Thank you for the presentation. Very interesting as always. I just have one question. Regarding the growth you're plotting, basically, if I look at the growth projection for the market ex-China, it looks to me pretty much flat from 2022 to 2025. Maybe you could help us understand how you will continue to grow your business over this period. How much is going to come from further market share gains? Have you achieved most of your geopolitics-related market share gains now at 39%, or do you think you can go further still? How much will be the contribution of enterprise businesses and the contribution of M&A in your growth projections over the next three years, let's say? I try to take note of all the questions, I hope I can summarize reasonably. You're probably right that if we pull the line from 2020 in our graph there, that gives us a 3% CAGR from that point in time, if you draw it from 2022, it might be a flattish development. That's still a cycle that is extended and peaking higher than the 4G if we start in that point. We believe that there are upsides, as we said. We believe that we could grow on the count of two reasons, underlying reasons. Number one is that we look at the mid-band densification as well as the enterprise and Fixed Wireless Access. Those were the three areas we presented here that we believe that the overall market could extend both in peak and extension in the back end. That's number one. That would drive a difference or an upside to the lower case that I showed earlier on the first slide. Our own competitiveness, and again, this goes back to our own ability then, because as I said also in that market, that we defined a 3% CAGR from 2020 to 2025. In that, our own ability to compete, that lies in our own investments and for competitiveness in the market. Again, that fits back into the stronger Massive MIMO portfolio. We believe that Massive MIMO is going to be the major contributor in the 5G development. Our ability then to continue that technology leadership for our customers' benefit and make the right choices, because again, our customers are very good at selecting the parties that make sense for them. We hope we're able to continue meeting their requirements. That's one part. I think it's very hard to say exactly what proportion out of the 5G growth is going to be enterprise, et cetera. It's still in the early stages. When we look at what we can do in our own factor, and when we look at the conversations with our customers, we believe there's an opportunity to bring 5G into enterprise and make that ubiquitous connectivity platform. Okay. Can I have just a quick follow-up, please? Sure. Just to come back a little bit on the chipsets and leading-edge technology that is required. You mentioned earlier that some vendors can compensate for the lack of leading-edge technology with more software implementation. I guess at some point that runs its course, and you can no longer compensate with software, and you really need those leading-edge chips. Do you think at some point in time, competitors that don't have the right technology will just be unable to implement the latest advances, and therefore will be disqualified? Is that likely to happen at some point? It's very hard to say, to be honest. What we need to focus on is to make the best out of where the people have access to. We need to compete assuming that everybody has access to the same talent, to the same technology, to the same leading-edge chipsets. I'm less concerned in a way whether a competitor has it or not. What we need to focus on is to make the best of the leading-edge technology we have at hand, because if we were in business only for someone being blocked for certain devices or certain capabilities in the market, that gives a very loose competitive premise. I'd rather see it that assuming everybody has the same access to technologies, we should still be the naturally selected supplier in that sense. These things can change very quickly, and there are, of course, alternative founderies that are building up capabilities over time, bringing down the competitiveness or providing that type of competitive source in alternative foundries. There is, of course, a hardware-software interplay that gets benefited by having leading-edge technologies on both hardware and software. Thank you very much. Thanks. Thanks, Alexander. We'll go to the next question from Sandeep Deshpande at JP Morgan. Hi, Sandeep. Hi. Thanks for letting me on. There's a lot of discussion today about the mid-band, essentially coverage as well as the capacity build. Some of your customers, particularly in North America, still talk about high band. Can you talk about what you are doing there and whether this is a focus or this is now with mid-band becoming available across the world, the focus on the high band is less? Of course, one of the issues there is that 256 Massive MIMO could be very well utilized in the high band frequency. Maybe you can talk about what's happening there. Then I have one quick follow-up. It's clearly so that the focus now, you're right, the U.S. market due to unavailability of mid-band largely built on DSS partly, i.e., utilizing 5G low band. Also low band established low band with 5G DSS and complemented that with high band. C-band is a focus right now. We believe that millimeter wave will continue to play a key role. That is when you want to get a multi-gigabit speeds and extreme capacity in certain conditions, in certain hotspots, et cetera, you want to utilize all the three layers in the network, the low band for coverage, the mid band, and the high band for capacity. We all know there is an seemingly unsaturated demand in the mobile broadband case. When we get into high-performing enterprise use cases, you need to have dedicated facilities with very low latency and high performance, high throughput type of use cases. In short, we believe that there is a very strong case for, and that millimeter wave will continue playing a key role, and we see our U.S. customers continue investing in that. Understood. Thank you. My follow-up quick question is on this regional exposure. Because of the geopolitical tensions, one of the players is losing share in various markets. We have not yet fully seen that in your numbers. When you talk about this 2% growth or 1% growth from 2022 to 2025, theoretically at least, if there is going to be share shifts, we will be seeing that over the next three years, correct? If you look historically, we've gone then from up to a 39% market share from about 33% a few years back. We want to continue with that type of evolution, as we said before. That's an ambition. We believe we have grown in the major markets based upon our own analysis. Based on Dell'Oro, we see a strong growth in North America. We see strong growth of market share also in Europe, and in certain other markets. We see a stronger market share growth in the markets, and we see that on the totality in certain markets like North America and Europe. Great. Thanks. Thanks. We will move to the last question of this session. That's from Sébastien Sztabowicz from Kepler Cheuvreux. Hi, Sébastien. Yeah. Hello, everyone. Thanks for taking the question. One on margin on networks. How do you see the margin on networks trending moving into 2022? Where do you see some potential upside to your margin and some downward pressures in the coming quarters? Looking at the Open RAN market, your Nordic competitors have been quite ambitious there and seem to be quite progressing well. How do you see the Open RAN market evolving in the next few years, and how do you plan to protect your incumbent position on the radio access network market going forward? Thank you. On the first point, it's important not to look too much at quarter-by-quarter evolution of the gross margin, because it's sensitive for quarterly deviation. If we look rolling gross margin, we have around 45%. I would say that's a relevant range or relevant point to look at. Possibly some long-term upsides in there, but we want to make sure that we keep room for, call it R&D investments and other things we need to do in the market to stay relevant or deals we need to take. Take that as a good guidance. Ultimately, we target the range we've discussed before, which is about 16%-18% for networks. Again, that may not be a ceiling for us, but we want to make sure we have strategic flexibility around numbers, and to do what we believe is right for the long term strategic positioning for us. We look at Open RAN. I think we're looking at somewhere between 10%-15% up by 2025. I think it lowers about 13% total Open RAN market by that time. We are actively participating in this with our Cloud RAN solution, with our SMO solutions. On top of that, as I mentioned before, we're actively working towards harmonizing and standardizing interfaces over the medium long term to make sure that we drive the industry into a position where it can be competitive both for our customers and ultimately us. That we're actively participating in several standardization forums, the ones available, whether that's O-RAN Alliance or 3GPP, whatever it might be. We will ensure that we drive the industry in a position where we believe that we can retain the scale and over time, create a standardized environment as well. Great. Thanks, Sébastien. Thanks, Fredrik, for all these answers. Thank you all for good questions. With that, I would like to close this call. There will be a replay of this available at our website as soon as possible. Thank you all, and see you around January when we will present our Q4 numbers. Thank you.