Telefonaktiebolaget LM Ericsson Accelerates 5G for Enterprise with Acquisition of Cradlepoint Investor Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Johanna Ahlqvist - SEB, Research Division - Analyst : Congratulations to a great acquisition. First question maybe to you, +sa. If you can share some details on how the process behind this acquisition was? Did you find this company? Or they -- did they come to you? And how should we look upon this. Was this one in a million acquisition? Or should we expect more of the same going forward? And maybe that's on that topic to you, Carl, I know you mentioned the net cash position, now if you exclude the pension liabilities after this acquisition, will be some SEK 27 billion. Would you consider -- is that sort of the magnitude that you consider to use for future acquisitions? Or how do you look upon that? +sa Tamsons - Telefonaktiebolaget LM Ericsson (publ) - SVP, Head of Business Area Technologies & New Businesses and Head of Segment Emerging Business Thank you, Johanna. When it comes to the background and context for this acquisition, as B÷rje mentioned in the beginning, we have a focused strategy, focused on open up the full potential of 5G and connected world. A big part of the 5G rollout is, of course, the big enterprise opportunity. And we have -- we are proactively looking at both inorganic and organic and partnership strategies to make that happen. This is part of that focus and strategy. This is, I would say, the wireless WAN edge market is one of the segments that we've been looking into as part of the strategy, and as Cradlepoint is the clear leader, it has been an actual company to look at and engage with. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 18, 2020 / 7:00AM, ERICb.ST - Telefonaktiebolaget LM Ericsson Accelerates 5G for Enterprise with Acquisition of Cradlepoint Investor Call Carl Mellander - Telefonaktiebolaget LM Ericsson (publ) - Senior VP, CFO and Head of Group Function Finance & Common Functions Okay. Thanks, +sa. And Johanna, Carl here, on your second question, then. I think that what's important to say when it comes to our acquisition strategy is that we are -- it's part of our focused strategy, as such. So we will be looking at portfolio near acquisitions, but in a disciplined way, of course and we always make a make partner or buy assessment for different technologies or different angles to our business. In this case, I think this was a clear value-creating opportunity for us, propelling us into this space. In other cases, of course, it's the R&D route -- internal R&D route that is more compelling. And when it comes to available resources for further acquisitions, we have not really announced or discussed it in terms of how much money will be invested in these various parts. It's more a question for us about balancing financial resilience, of course, with creating value by investing either in our own R&D or in nonorganic. So I think that's what I can say about that, Johanna.

Question: Frank Maa° - DNB Markets, Research Division - Analyst : So I have a clarification question to one of the previous questions, when +sa talked about the market size, which I think you said was USD 4 billion in [2023] for the wider market. Could you please define the Cradlepoint's part of that market? How could you call -- what would you call that part because I think you said that they have a 50 -- sorry, a 25% market share of a smaller part of that $4 billion market? +sa Tamsons - Telefonaktiebolaget LM Ericsson (publ) - SVP, Head of Business Area Technologies & New Businesses and Head of Segment Emerging Business For the $4 billion, I think -- thank you, Carl. The $4 billion is in 2024. And so --

Question: Frank Maa° - DNB Markets, Research Division - Analyst : So then my main question was more relating to what synergies you see between the Cradlepoint Edge WAN products and your own dedicated wireless networks unit within, for instance, factory automation and other applications. Are there any (inaudible) to these 2 businesses as a bit independent also in the medium to longer term? +sa Tamsons - Telefonaktiebolaget LM Ericsson (publ) - SVP, Head of Business Area Technologies & New Businesses and Head of Segment Emerging Business I think, my first is -- to best answer that -- the big synergies is actually that jointly, we can accelerate adoption in all these segments. Because to say, realize a use case where you connect an ambulance and ambulance team, you both need to connect the ambulance. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 18, 2020 / 7:00AM, ERICb.ST - Telefonaktiebolaget LM Ericsson Accelerates 5G for Enterprise with Acquisition of Cradlepoint Investor Call And there you have typically a Cradlepoint, rather an edge solution in the ambulance to be able to connect, that then aggregate all the devices that can be devices in the ambulance, it can be what the responders basically are wearing. So you can connect it to, say, the whole system and all the people and things around that ambulance. And that's what that driver secures. Then of course, to make sure they have connectivity, you need to have the networks, and that's what we, the service provider provides. In addition to that, if you take a solution like dedicated networks, we could actually start bundling this offering. So you get a complete solution to a factor we both have the things to connect the site locally and you can provide a local network. Same thing as global IT platform, we can provide a solution through our service providers, we can have that solution manage across all the ambulances in a country or across country. So that's how we see the synergies, more complementary and more to accelerate adoption and provide more complete solutions to the end market.