Risk Factor UpdateSource: RNS
Ericsson updates risk factors for Euro corporate bond prospectus
· Ericsson is currently in the process of issuing a EUR 500 million unsecured 8-year bond under its EMTN program
· In connection with this proposed issue, Ericsson updates the risk factors in its prospectus regarding geopolitical and trade uncertainty
As previously disclosed by Ericsson (NASDAQ: ERIC) in its Q4 2020 financial report and in its 2020 annual report, there is a risk that the decision by the Post and Telecommunication Authority (PTS) to exclude Chinese vendors' products from the 5G auction in Sweden may adversely impact the economic interests of Sweden and Swedish industry, including those of Ericsson.
This risk has been included in the risk factors in Ericsson's EMTN prospectus. The update coincides with Ericsson's proposed issue under the EMTN program and the change in relation to the risk factor, as shown in the Q4 report, is reflected in the italicized text below.
Updated extract of text from Q4 report
Ongoing geopolitical and trade uncertainty from a range of factors may have a material adverse impact on our business, operations, business prospects and consequently on operating results, financial conditions and our ability to meet our targets.
There are uncertainties for the future bilateral trading relationship between China and several countries as a result of restrictions towards Chinese vendors in national 5G networks.
In Sweden, the Post and Telecommunication Authority (PTS) has taken a decision to exclude Chinese vendors' products from the 5G auction. Of special relevance for Ericsson in this context is the trade relationship between Sweden and China, since Ericsson, even though it is a global company with a presence on all global markets, has its headquarters in Sweden and therefore risks collateral damages from a weakened Swedish-Chinese relationship as a result of this decision. There is a risk that the above lead to measures taken by China that are targeted at the economic interests of Sweden and Swedish industry, including those of Ericsson. While Ericsson is invited to various ongoing tender processes in China, the final outcome remains uncertain and it is the company's current assessment that the risk has increased that Ericsson will in those tenders be allocated a significantly lower market share than its current market share.
The geopolitical situation can have consequences on the entire industry, with an increased likelihood of further industry split, separation of global value chains and separation of global standards for mobile telecommunications. This overall development has also led to several countries evaluating how to ensure uninterrupted access to telecommunication network infrastructure, for example through promoting disaggregation of the Radio Access Network and support of national communication network infrastructure champions as alternative to the established global vendors such as Ericsson although the timing and extent of this remains unclear.
All of the above may have a material and potentially lasting adverse impact on our business, including sales, market share, market access and supply chain and R&D activities, our financial condition and results of operations."
Please also see the Annual Report 2020 for risk factors and uncertainties of relevance to Ericsson and its business.
NOTES TO EDITORS:
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Ericsson enables communications service providers to capture the full value of connectivity. The company's portfolio spans Networks, Digital Services, Managed Services, and Emerging Business and is designed to help our customers go digital, increase efficiency and find new revenue streams. Ericsson's investments in innovation have delivered the benefits of telephony and mobile broadband to billions of people around the world. The Ericsson stock is listed on Nasdaq Stockholm and on Nasdaq New York. www.ericsson.com
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