x
5G

Ericsson shareholder urges firm to explore sale to US – report

Shares in Ericsson and Nokia received a boost on Friday after an Ericsson shareholder responded positively to US comments about taking ownership of one of the Nordic equipment giants to counter Huawei, a Chinese rival deemed a security threat by US politicians.

Cevian Capital, which holds an 8.4% stake in Ericsson, said the US interest was welcome and that executives at the firm should look into a potential sale, according to a Reuters report.

Christian Gardell, Cevian's managing partner, told the news organization that any deal would have to be based on "a completely different valuation level than today's ridiculous share price." In emailed remarks, he said Ericsson's management board should treat any US offer with "the highest priority."

The report comes only a day after US Attorney General William Barr said the US should consider buying a controlling stake in either Ericsson or Nokia for access to secure 5G equipment. The move could blunt the rise of China and Huawei in 5G, he said.

Barr indicated that a takeover could take place "either directly or through a consortium of private American and allied companies."

Ericsson's share price was up 5.7% at close of business on Friday in Stockholm, while Nokia's had risen nearly 7% in Helsinki.

A takeover could hit political opposition in the Nordic countries because Ericsson and Nokia are seen as national champions in Sweden and Finland respectively, employing thousands of people at their headquarters and other facilities. It could also prove unpopular with European officials concerned about the rise of US technology giants and Europe's failure to produce equivalents.

Anders Ygeman, Sweden's minister for energy and digital development, alluded to those concerns during an interview with Reuters but said any concrete US proposal would be a matter for Ericsson shareholders.

"Clearly there is both a strong Swedish and European interest in being able to continue to lead technology development," he is quoted as saying. "Ericsson is important both for jobs and business in Sweden but also as a technology leader."

A potential US bid for one of the vendors is presented as an alternative to funding smaller US software companies such as Altiostar, Mavenir and Parallel Wireless, all of which are developing new technologies that should work on general-purpose equipment. Critics say these "open RAN" (radio access network) systems are too immature to threaten Huawei for the foreseeable future.


Want to know more about 5G? Check out our dedicated 5G content channel here on
Light Reading.


US investment in either Ericsson or Nokia could help those firms to compete more aggressively against Huawei, but it could also deal a blow to smaller rivals, including open RAN firms, and make the big three players even more dominant than they already are.

For that reason, it is unlikely to be welcomed by European service providers such as Vodafone, which has repeatedly complained about the lack of "supplier diversity." CEO Nick Read believes support for open RAN companies could help to solve that problem.

The US has argued that China's government could use "backdoors" in Huawei equipment to spy on other countries or sabotage networks -- charges the company has regularly denied.

After the UK recently imposed restrictions on Huawei's role in the 5G market, Vodafone's Read urged other European authorities not to follow suit, insisting these moves will hinder 5G rollout and drive up costs.

Opponents of restrictions say they would produce 5G networks that are even less secure by making operators more dependent on just two Nordic suppliers.

Related posts:

— Iain Morris, International Editor, Light Reading

Be the first to post a comment regarding this story.
HOME
SIGN IN
SEARCH
CLOSE
MORE
CLOSE