STOCKHOLM (Reuters) – Sweden’s Ericsson (ERICb.ST) reported a smaller-than-expected rise in fourth-quarter core earnings on Friday and said higher costs would spill over into 2020 as the telecoms equipment maker looks to exploit its leading position in super-fast 5G networks.
Its shares fell more than 6% in early trading.
After a number of lean years, Ericsson has been boosted by the roll-out of 5G, particularly in the United States.
But while 5G has helped sales, it has increased costs. Ericsson has also opted to take on strategically important clients to gain market share, betting a hit on margins in the short term will help to deliver longer-term profitability.
The company recently bought the antenna and filter business of Germany’s Kathrein to boost its 5G portfolio and said costs and investments related to the deal would weigh on margins through 2020.
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