STOCKHOLM/COPENHAGEN : Telecom equipment makers Nokia and Ericsson were among the worst performers in Europe on Thursday, bruised by ongoing patent battles which cut profit margins and offset strong demand for 5G equipment.
As the early stages of a rollout of large projects like 5G tend to have lower margins, telecom companies depend on their high-margin patent royalty business to boost profits. Companies such as Ericsson charge $2.50 to $5 for every 5G handset they sell and come under pressure when negotiating new contracts.
"We are very confident about our portfolio of patents and we are in no rush to strike a deal ... we are going to make sure we get a good mutually beneficial deal," Ericsson CFO Carl Mellander said in an interview.While the companies continue to benefit from higher spending on 5G equipment, they both warned of cooling down of their main market, North America.
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