• Ericsson has reported relatively stable financials for 2025
• Vendor is pinning its growth hopes on demand from defence and mission-critical sectors
• And it is investing for future radio access network (RAN) architectures that can support the uplink and low-latency demands of AI applications
• Plans to reduce its cost base further so more job cuts are expected

In presenting Ericsson’s fourth quarter and full year financial results early Friday morning, CEO Börje Ekholm chose to look ahead rather than dissecting the vendor’s performance of the past 12 months in an effort to persuade the market and investors that even in a world where the radio access network (RAN) equipment sector – Ericsson’s bread and butter – is “flat”, the company is well placed to grow its top and bottom lines. 

It has long been recognised that the RAN equipment market, which has shrunk in the past few years to be worth in the region of $32bn a year, isn’t going to drive much in the way of sales growth for the RAN vendors in the coming five years or so, which is why Ericsson and its main rivals have been investing and developing product lines for various enterprise sectors. 

But network operators will continue to invest in their 5G networks and Ekholm is keen that Ericsson has the right portfolio to suit the mobile network operators’ evolving needs. 

The CEO noted that while much of the focus on the AI tech sector to date has been on AI model development and datacentre processing capacity, in time the AI activity and value will shift to applications and products such as robots and smart wearables (such as augmented reality (AR) glasses) and that in turn will impact wireless data traffic flows. Wireless access networks will need greater uplink capacity and be able to support lower latencies to support such applications and products and, according to Ekholm, only 5G standalone (5G SA) and ultimately 6G networks will be able to adequately support that traffic. (You’ll hear a different story from the Wi-Fi tech community of course.)

We know that major operators are also thinking about how AI traffic flows will impact their RAN configurations and requirements – see Verizon CTO: We’re on the cusp of ‘another smartphone moment’.

Ekholm noted that current deployments in key markets such as Japan are paving the way for future network architectures that will be capable of supporting AI-driven traffic flows. 

That’s a relatively slow burn market trend, though, so what about nearer term opportunities? Ekholm pointed to growing demand for next-generation wireless networks in the defence and mission-critical sectors (utilities, transport, emergency services), with the defence sector in particular being a “very large opportunity” as current proprietary solutions are replaced by 3GPP standards-based networks that can deliver local and wide-area network capabilities such as sensing (for detecting things such as drones as well as objects that are not connected to a network). The CEO declined to specify just what size of opportunity this might be but did also state that Ericsson does not plan to grow its position in any markets through major acquisitions, though smaller, strategic “tuck in” takeover deals were a possibility.  

He also noted that the 5G core sector is set to grow in value during the next few years as still only about 25% of mobile operators have deployed 5G standalone core platforms so far, so there is plenty of growth left to come. (Ericsson currently has 5G SA core deployments at just 55 mobile operators, as TelecomTV recently reported.) 

But such sales growth opportunities are not likely to drive the profits and dividends that would keep investors happy, so the vendor is also going to continue with its ongoing efficiency strategy that will see it reduce operational costs related to its product supply and delivery processes and to its headcount, so further job cuts can be expected: Ericsson recently announced plans to cut up to 1,600 positions in Sweden. The vendor reduced its total workforce by about 5,000 positions in 2025 and noted in its earnings report that “restructuring charges for 2026 are expected to be at elevated levels”.

The vendor is also looking to cheer its shareholders with the company’s first ever share buyback programme – pegged at 15bn Swedish Krona ($1.66bn) – and an increased dividend for 2025. 

Coupled with improved margins and net profits, shareholders liked the news, as Ericsson’s share price gained 8.6% in Friday trading on the Stockholm exchange to reach SEK93.2. 

So how did Ericsson perform financially in the fourth quarter of 2025 and the full year? You can see all the details in this earnings announcement, but there are a few numbers worth picking out. 

The Networks unit – mobile network infrastructure – is still the main driver of revenues. For the full year 2025, sales were SEK151bn ($16.7bn), which on an “organic” basis (adjusted for currency exchange rate fluctuations and the impact of any M&A activity stripped out) was 1% better than in 2024. And as we’ve heard, Ericsson isn’t expecting this market to deliver meaningful growth in the future. (Note: Ekholm was asked whether he expected any additional RAN business opportunities in Europe as a result of the EC’s new clampdown on high-risk suppliers – essentially, through opportunities to replace Huawei or ZTE – but he noted that if those opportunities were to arise that wouldn’t happen for years yet.)    

The Cloud Software and Services unit – core platforms, automation and orchestration software, BSS systems – generated full year revenues of SEK62.7bn ($6.9bn), an increase of 6% on an organic basis. 

The Enterprise division – private wireless networks, enterprise wireless solutions, Vonage APIs and platforms – reported full year revenues of SEK21.1bn ($2.3bn), down by 5% on an organic basis, with the CEO noting that private 5G sales declined in 2025. This is the division upon which much of Ericsson’s future growth is pinned.

Ekholm is doing his best to put a positive spin on Ericsson’s prospects and investors are obviously encouraged by the vendor’s focus on cutting costs and returning more money to shareholders, but a lot seems to be hinging on prospects in markets where Ericsson is not currently a big hitter and, it should be noted, where all of its main rivals are also hoping to grab market share. The CEO will need to show some evidence soon that the enterprise story isn’t heading for a disappointing plot twist.  

- Ray Le Maistre, Editorial Director, TelecomTV