Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) Q2 2023 Earnings Call Transcript

Borje Ekholm: Yes. We continue the very deep engagement with a number of front-runner customers around the world. So we work very intensively on that. What is — call it, one of the things that needs to happen is we need to have an abstraction layer in the network that basically allows a CPaaS to call up functionalities from the network. And that is not a surprise. So that’s — but that’s where we have a lot of work to be done. And we continue that work and that’s why when we’ll get the first revenues, we — I think we have said that we should have a network API more in the market by year-end. That still would be my best estimate. Will it be Q4? Hopefully. But it could, of course, slip into early next year. But that’s the time frame we’re working on. And it’s a lot of groundwork that needs to happen here before we are at the situation of creating a launch. But we’ll hopefully here going to come back and talk much more in detail about this towards the end of the year.

Peter Nyquist: Thanks, Börje. Thank you, Daniel. So we are actually now moving into the last question of this Q&A session and that question is from Sandeep Deshpande at JPMorgan.

Sandeep Deshpande: Can you hear me?

Peter Nyquist: We can hear you.

Sandeep Deshpande: My question is, Börje, you talked about the buildup into an improvement in sales. And one of the points you made on the buildup of improvement is that there will need to be further densification of the base stations. Given that we are seeing that the U.S. telcos are cutting spending at the moment, have you had conversations with them that gives you any confidence that they’re going to actually densify their 5G cells going forward? And then I have one more quick follow-up on the Software business.

Borje Ekholm: I’m not going to go into the details about the customer engagements. But what we see is we are — an increasing amount of discussions is on the network quality and the need for network quality. And that is what gives me the comfort that at some point in time here, we will see that recovery coming back. And in reality, it’s back to consumer satisfaction. The consumer, the user. And we often think about it as a device for a smartphone. But the reality is in the future will be many new type of applications. Enterprise applications. If it is AI use cases, they will all require connectivity and reliable — always available connectivity. So we see quite a lot of use cases here that will drive network traffic. So I think it is here.

We’re in a phase where, of course, if you’re a customer, you’re facing uncertainty right now. You’re going to adjust accordingly. But I’m also convinced that at the end of the day, the end user will need a certain service and that’s what’s going to create the market. Is it uncomfortable now? Yes, it is uncertain, right? And I think it’s fair to say that. But the reality is connectivity is a need. So if you go today to a sporting event, I don’t — as far as I know, in many parts of the world, I cannot upload a picture because it’s simply capacity constraints. So we need to put more capacity in stadiums, more capacity indoors, in shopping malls, in office buildings, et cetera. Those are massive use cases that will be deployed over the coming several years.

And they will be needed in order to digitalize society, digitalize enterprises and further digitalize the consumer.

Peter Nyquist: You had a final sort of Software question, Sandeep, as well.