* 5G roll out in China a big driver this quarter - CFO
* Gross margin rises to 43.2% from 37.8%
* Expects profits from China to improve further
(Adds comments from CFO interview, details)
STOCKHOLM, Oct 21 (Reuters) - Sweden's Ericsson
on Wednesday reported quarterly core earnings that beat market
estimates, helped by higher margins and China's 5G rollout, and
said it was "more confident" in meeting its 2020 targets.
Ericsson's 5G contract wins have touched 112 as more telecom
operators are building next-generation networks and as
diplomatic pressure from the United States is pushing out market
leader Huawei from more countries.
Third-quarter adjusted operating earnings rose to 9.0
billion Swedish crowns ($1.0 billion) from 6.5 billion a year
ago, beating the mean forecast of 6.98 billion crowns, according
to Refinitiv estimates.
Total revenue rose 1% to 57.5 billion crowns.
"While the pandemic has hurt revenues for several of our
customers, and in some cases this has led to a reduction of
capex, we have not seen any negative impact on our business,
largely due to footprint gains," Chief Executive Borje Ekholm
said in a statement.
The group's gross margin, excluding restructuring charges,
rose to 43.2% in the third quarter from 37.8% in the year-ago
"The 5G roll out in China was the big driver in this
quarter," Ericsson CFO Carl Mellander told Reuters.
Ericsson said contracts in China have developed according to
plan, contributing to profits in the third quarter and are
expected to improve further.
Unlike its Nordic rival Nokia, Sweden-based
Ericsson has won contracts from all three major operators in
China to supply radio equipment for 5G networks.
However, a decision by the Swedish government to block
China's Huawei and ZTE from domestic 5G networks may
lead to a catch-22 situation for Ericsson. While it may win some
more share in Sweden's network infrastructure, the risk of a
retaliation by China looms large.
"We don't comment on different countries' decisions but in
general we believe in free competition," Mellander said.
China's telecom regulator issued a notice on Tuesday calling
for strengthening of supervision of foreign-invested telecom
companies in the country.
Separately, Ericsson announced on Wednesday a five-year,
multi-billion crowns deal with Telia to upgrade its
4G networks across Sweden and Estonia.
($1 = 8.7165 Swedish crowns)
(Reporting by Supantha Mukherjee and Helena Soderpalm; editing
by Niklas Pollard and Kim Coghill)