Mixed Fortunes for Ericsson and Nokia in China 5G RAN Tender

As expected, domestic vendors Huawei and ZTE were awarded the largest contracts in China Broadcasting Network (CBN) and China Mobile’s recent joint 5G infrastructure tenders. Together with compatriot Datang, the trio accounted for 94.1% of the 480,397 base stations under tender with the remaining 6% or 28,822 base stations shared between foreign vendors Ericsson and Nokia (Exhibit 1). Rival operators Chinese Telecom and China Unicom are expected to announce the results of their second 5G tenders in the coming days.

CBN & China Mobile Tender

CBN is the fourth largest operator in China and has partnered with China Mobile to build and operate a 5G network using old analogue TV spectrum in the 700 MHz band. The network is being designed to primarily deliver video streaming services to CBN’s existing cable TV customer base.

Overall, Ericsson was awarded a 2% share of CBN/China Mobile’s three tenders, a not an unexpected result.  Clearly, retaliatory measures against Ericsson were inevitable following the Swedish government’s decision to ban Huawei and ZTE from the Swedish 5G market in December 2020. Neighbouring Finland also passed similar legislation but did not specifically mention Huawei or ZTE by name. In the ensuing months, Ericsson has been lowering expectations in China, including warning that it may not be awarded any market share in the current round of tenders. While exclusion cannot yet be ruled out in the China Telecom and China Unicom tenders, it is equally possible that Ericsson could end up with a similar 2% share.

Exhibit 1: Individual Tender Results (left) and Overall Market Share (Right)

Individual Tender Results (left) and Overall Market Share (Right)

Impact on Ericsson’s Earnings

The geopolitical fallout between China and Sweden has also impacted Ericsson’s present 5G contracts in China. In 2019, the company won an 11% share of China Mobile’s first 5G tender. At its second quarter earnings call last week, Ericsson reported a SEK 2.5 billion ($287 million) reduction in revenues in China, a 60% drop Year-on-Year (YoY), due to “lower volumes from delayed 5G deployments.” However, Ericsson claims that this is revenue that has effectively been lost and will not be recouped at a later date.

While China impacted revenues at Ericsson’s Network business, it had a disproportionate knock-on effect on its Digital Services business, where revenues dropped 8% YoY due primarily to lower sales in mainland China. In addition, it was forced to write-off around SEK 300 billion ($34 million) of pre-commercial inventory in China. In contrast, Digital Services showed strong double-digit growth in Europe and North America. However, lower revenues from China coupled with increased R&D investment during the quarter had a negative impact on margins and will now probably push out profitability of Digital Services to 2023.

Nokia Returns to China’s 5G Market

In contrast to Ericsson, Nokia has reasons to celebrate as it is now back in the Chinese 5G RAN market. With a more cost-competitive 5G portfolio compared to 2019, Nokia was awarded a 4% share of the CBN/China Telecom tenders. Although small, it could yet rise in subsequent awards by China Telecom and China Unicom and is an important morale boosting win as the company strives to re-claim global market share.

More importantly, Nokia again has a presence in the Chinese RAN market, a key market for all vendors. Not only is China a volume market, it is also a leader in 5G technology development. It is therefore imperative that vendors have a market presence there. Perhaps a consolation for Ericsson is that it may have avoided the worst scenario – i.e. complete exclusion from the Chinese market.

Ericsson thriving outside China

Despite the setback in China, Ericsson is firing on all cylinders outside China. Revenues at its Networks business unit increased 11% on a constant currency basis, reflecting strong market activity in other regions of the world. Strong growth was reported in Europe as well as in North America, its biggest market, driven by increasing demand for C-band infrastructure. It also won its largest ever contract, a five-year $8 billion contract with Verizon. Ericsson continues to increase its market share, both in markets where it competes against Chinese vendors as well as in markets where they are absent. Counterpoint Research believes that this is largely driven by the steady and continuous improvement in gross margin at the Networks business over the past four years, up from 23% in Q2 2017 to an impressive 47.9% in the most recent quarter.

Geopolitics driving 6G?

Overall, Ericsson’s reduced market presence in China is more than compensated financially by market share gains in other parts of the world, where Chinese vendors are excluded. However, continued geopolitical tensions between China and much of the western world is already starting to have serious implications on the future development of the telecoms industry, particularly with respect to 6G. In recent years, the telecoms industry has benefited from single global 4G/5G standards. Now, a return to the multi-standard days of 3G cannot be excluded.

Related Reports

Gareth has been a technology analyst for over 20 years and has compiled research reports and market share/forecast studies on a range of topics, including wireless technologies, AI & computing, automotive, smartphone hardware, sensors and semiconductors, digital broadcasting and satellite communications.

Term of Use and Privacy Policy

Counterpoint Technology Market Research Limited


In order to access Counterpoint Technology Market Research Limited (Company or We hereafter) Web sites, you may be asked to complete a registration form. You are required to provide contact information which is used to enhance the user experience and determine whether you are a paid subscriber or not.
Personal Information When you register on we ask you for personal information. We use this information to provide you with the best advice and highest-quality service as well as with offers that we think are relevant to you. We may also contact you regarding a Web site problem or other customer service-related issues. We do not sell, share or rent personal information about you collected on Company Web sites.

How to unsubscribe and Termination

You may request to terminate your account or unsubscribe to any email subscriptions or mailing lists at any time. In accessing and using this Website, User agrees to comply with all applicable laws and agrees not to take any action that would compromise the security or viability of this Website. The Company may terminate User’s access to this Website at any time for any reason. The terms hereunder regarding Accuracy of Information and Third Party Rights shall survive termination.

Website Content and Copyright

This Website is the property of Counterpoint and is protected by international copyright law and conventions. We grant users the right to access and use the Website, so long as such use is for internal information purposes, and User does not alter, copy, disseminate, redistribute or republish any content or feature of this Website. User acknowledges that access to and use of this Website is subject to these TERMS OF USE and any expanded access or use must be approved in writing by the Company.
– Passwords are for user’s individual use
– Passwords may not be shared with others
– Users may not store documents in shared folders.
– Users may not redistribute documents to non-users unless otherwise stated in their contract terms.

Changes or Updates to the Website

The Company reserves the right to change, update or discontinue any aspect of this Website at any time without notice. Your continued use of the Website after any such change constitutes your agreement to these TERMS OF USE, as modified.
Accuracy of Information: While the information contained on this Website has been obtained from sources believed to be reliable, We disclaims all warranties as to the accuracy, completeness or adequacy of such information. User assumes sole responsibility for the use it makes of this Website to achieve his/her intended results.

Third Party Links: This Website may contain links to other third party websites, which are provided as additional resources for the convenience of Users. We do not endorse, sponsor or accept any responsibility for these third party websites, User agrees to direct any concerns relating to these third party websites to the relevant website administrator.

Cookies and Tracking

We may monitor how you use our Web sites. It is used solely for purposes of enabling us to provide you with a personalized Web site experience.
This data may also be used in the aggregate, to identify appropriate product offerings and subscription plans.
Cookies may be set in order to identify you and determine your access privileges. Cookies are simply identifiers. You have the ability to delete cookie files from your hard disk drive.