Ericsson published Q1 2022 results last week, Nokia will publish in 10 days. Even though last week, Ericsson EBIDA was affected by delays in software revenues which should be fully integrated next quarter, management made bullish comments on 5G roll outs with a particular strong momentum in the US, good roll out of 5G contracts elsewhere boosted by strong demand for digital products. From Ericsson results a couple of conclusions can be already drowned:

1-There is no slowdown in 5G deployment due to inflationary pressures, ship shortage  or Ukrainian crisis

2-The US market which was the earliest area for 5G launch continues to have a strong momentum meaning the 5G cycle could be longer and more powerful than previous technological cycles.

3-It is the only segment in technology where Europeans players with Ericsson and Nokia dominate in a duopoly situation.

Conclusion

This sector continues to be largely ignored by quality investors who associate Ericsson and Nokia with volatility and profit warnings. Thanks to the exit of Chinese players and refocus strategies on their core activity, Ericsson and Nokia should continue to deliver good results with interesting growth prospects independently of the Ukrainian war or inflation tensions as digitization is one of the few growth segments of the economy.