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B1 Segment information | 12 Months Ended
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Dec. 31, 2020
Disclosure Of Operating Segments [Abstract] |
B1 Segment information |
B1 | Segment information
Operating segments When determining Ericsson’s operating segments, consideration has been given to the financial reporting reviewed by the Chief Operating Decision Maker (CODM). Markets and what type of customers the products and services aim to attract has been considered, as well as the distribution channels they are sold through. Commonality regarding technology, research and development has also been taken into account. To best reflect the business focus and to facilitate comparability with peers, four operating segments are reported;
– | Networks
– | Digital Services
– | Managed Services
– | Emerging Business and Other.
Segment Networks support all radio-access technologies and offer hardware, software and related services for both radio access and transport. The product-related services comprise design, tuning, network rollout and customer support. 82% (82% in 2019 and 82% in 2018) of the IPR licensing revenues are reported as part of segment Networks. Segment Digital Services includes products and services for operators in the areas of BSS, OSS, Cloud Core, Cloud Communication and Cloud infrastructure. It also includes consulting, learning and testing services. 18% (18% in 2019 and 18% in 2018) of the IPR licensing revenues are reported as part of segment Digital Services. Segment Managed Services provides Networks and IT Managed Services, Network design and Optimization, and Application Development and Maintenance to operators. Segment Emerging Business and Other includes:
– | Emerging Business, including IoT, iconectiv, Cradlepoint and New businesses
– | Media businesses, including Red Bee Media and a 49% ownership of MediaKind.
Market areas The market areas are the Company’s primary sales channel with the responsibility to sell and deliver customer solutions. The Company operates worldwide and reports its operations divided into five geographical market areas:
– | Europe and Latin America
– | Middle East and Africa
– | North America
– | North East Asia
– | South East Asia, Oceania and India.
In addition, IPR licensing revenues and the majority of segment Emerging Business and Other are externally reported as market area Other. Major customers The Company derives most of its sales from large, multi-year agreements with a limited number of significant customers. Out of a customer base of more than 500 customers, mainly consisting of network operators, the ten largest customers accounted for 50% (49% in 2019 and 48% in 2018) of net sales. The largest customer accounted for approximately 13% (10% in 2019 and 9% in 2018) and the second largest customer accounted for 10% (8% in 2019 and 8% in 2018) of net sales in 2020. These customers were reported under segment Networks, Digital Services and Managed Services.
Operating segments 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  | Emerging |  |  |  |  |  |
|  |  |  | Digital |  | Managed |  | Business |  | Total |  |  |  |
|  | Networks |  | Services |  | Services |  | and Other |  | Segments |  |  | Group |
Segment sales |  | 165,978 |  | 37,324 |  | 22,600 |  | 6,488 |  | 232,390 |  |  | 232,390 |
Net sales |  | 165,978 |  | 37,324 |  | 22,600 |  | 6,488 |  | 232,390 |  |  | 232,390 |
Gross income |  | 72,413 |  | 15,637 |  | 4,012 |  | 1,662 |  | 93,724 |  |  | 93,724 |
Gross margin (%) |  | 43.6% |  | 41.9% |  | 17.8% |  | 25.6% |  | 40.3% |  |  | 40.3% |
Operating income (loss) |  | 30,851 |  | (2,206) |  | 1,563 |  | (2,400) |  | 27,808 |  |  | 27,808 |
Operating margin (%) |  | 18.6% |  | (5.9)% |  | 6.9% |  | (37.0)% |  | 12.0% |  |  | 12.0% |
Financial income and expenses, net |  |  |  |  |  |  |  |  |  |  |  |  | (596) |
Income after ﬁnancial items |  |  |  |  |  |  |  |  |  |  |  |  | 27,212 |
Income tax |  |  |  |  |  |  |  |  |  |  |  |  | (9,589) |
Net income |  |  |  |  |  |  |  |  |  |  |  |  | 17,623 |
Other segment items |  |  |  |  |  |  |  |  |  |  |  |  |  |
Share in earnings of JV and associated companies |  | 37 |  | 28 |  | 5 |  | (368) |  | (298) |  |  | (298) |
Amortizations |  | (775) |  | (607) |  | (5) |  | (602) |  | (1,989) |  |  | (1,989) |
Depreciations |  | (3,764) |  | (1,252) |  | (386) |  | (587) |  | (5,989) |  |  | (5,989) |
Impairment losses |  | (494) |  | (119) |  | (25) |  | (58) |  | (696) |  |  | (696) |
Restructuring expenses |  | (746) |  | (19) |  | (258) |  | (283) |  | (1,306) |  |  | (1,306) |
Gains/losses on sale of investments and operations |  | (129) |  | 12 |  | 5 |  | (29) |  | (141) |  |  | (141) |
Note B1, cont’d.
Operating segments 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  | Emerging |  |  |  |  |  |
|  |  |  | Digital |  | Managed |  | Business |  | Total |  |  |  |
|  | Networks |  | Services |  | Services |  | and Other |  | Segments |  |  | Group |
Segment sales |  | 155,009 |  | 39,857 |  | 25,565 |  | 6,785 |  | 227,216 |  |  | 227,216 |
Net sales |  | 155,009 |  | 39,857 |  | 25,565 |  | 6,785 |  | 227,216 |  |  | 227,216 |
Gross income |  | 64,717 |  | 14,836 |  | 3,990 |  | 1,281 |  | 84,824 |  |  | 84,824 |
Gross margin (%) |  | 41.8% |  | 37.2% |  | 15.6% |  | 18.9% |  | 37.3% |  |  | 37.3% |
Operating income (loss) |  | 24,767 |  | (4,027) |  | 2,309 |  | (12,485) |  | 10,564 |  |  | 10,564 |
Operating margin (%) 1) |  | 16.0% |  | (10.1%) |  | 9.0% |  | (184.0%) |  | 4.6% |  |  | 4.6% |
Financial income and expenses, net |  |  |  |  |  |  |  |  |  |  |  |  | (1,802) |
Income after ﬁnancial items |  |  |  |  |  |  |  |  |  |  |  |  | 8,762 |
Income tax |  |  |  |  |  |  |  |  |  |  |  |  | (6,922) |
Net income |  |  |  |  |  |  |  |  |  |  |  |  | 1,840 |
Other segment items |  |  |  |  |  |  |  |  |  |  |  |  |  |
Share in earnings of JV and associated companies |  | 26 |  | 41 |  | 3 |  | (405) |  | (335) |  |  | (335) |
Amortizations |  | (517) |  | (1,413) |  | (5) |  | (603) |  | (2,538) |  |  | (2,538) |
Depreciations |  | (3,604) |  | (1,478) |  | (413) |  | (566) |  | (6,061) |  |  | (6,061) |
Impairment losses |  | (295) |  | (128) |  | (24) |  | (43) |  | (490) |  |  | (490) |
Restructuring expenses |  | (68) |  | (614) |  | (45) |  | (71) |  | (798) |  |  | (798) |
Gains/losses on sale of investments and operations |  | (225) |  | (2) |  | (12) |  | 936 |  | 697 |  |  | 697 |
1) Includes costs of SEK -10.7 billion in 2019 related to the resolution of the US SEC and DOJ investigations.
Operating segments 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  | Emerging |  |  |  |  |  |
|  |  |  | Digital |  | Managed |  | Business |  | Total |  |  |  |
|  | Networks |  | Services |  | Services |  | and Other |  | Segments |  |  | Group |
Segment sales |  | 138,570 |  | 38,089 |  | 25,770 |  | 8,409 |  | 210,838 |  |  | 210,838 |
Net sales |  | 138,570 |  | 38,089 |  | 25,770 |  | 8,409 |  | 210,838 |  |  | 210,838 |
Gross income |  | 55,153 |  | 8,318 |  | 2,886 |  | 1,843 |  | 68,200 |  |  | 68,200 |
Gross margin (%) |  | 39.8% |  | 21.8% |  | 11.2% |  | 21.9% |  | 32.3% |  |  | 32.3% |
Operating income (loss) |  | 19,421 |  | (13,852) |  | 1,093 |  | (5,420) |  | 1,242 |  |  | 1,242 |
Operating margin (%) |  | 14.0% |  | (36.4%) |  | 4.2% |  | (64.5%) |  | 0.6% |  |  | 0.6% |
Financial income and expenses, net |  |  |  |  |  |  |  |  |  |  |  |  | (2,705) |
Income after ﬁnancial items |  |  |  |  |  |  |  |  |  |  |  |  | (1,463) |
Income tax |  |  |  |  |  |  |  |  |  |  |  |  | (4,813) |
Net income (loss) |  |  |  |  |  |  |  |  |  |  |  |  | (6,276) |
Other segment items |  |  |  |  |  |  |  |  |  |  |  |  |  |
Share in earnings of JV and associated companies |  | 28 |  | 27 |  | 3 |  | — |  | 58 |  |  | 58 |
Amortizations |  | (830) |  | (2,295) |  | (14) |  | (807) |  | (3,946) |  |  | (3,946) |
Depreciations |  | (1,717) |  | (933) |  | (169) |  | (456) |  | (3,275) |  |  | (3,275) |
Impairment losses |  | (308) |  | (406) |  | (29) |  | (354) |  | (1,097) |  |  | (1,097) |
Restructuring expenses |  | (1,781) |  | (5,366) |  | (276) |  | (592) |  | (8,015) |  |  | (8,015) |
Gains/losses on sale of investments and operations |  | (132) |  | (36) |  | (57) |  | — |  | (225) |  |  | (225) |
Products and Services by Segments |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  | Emerging |  |  |
|  |  |  | Digital |  | Managed |  | Business |  | Total |
|  | Networks |  | Services |  | Services |  | and Other |  | Segments |
2020 |  |  |  |  |  |  |  |  |  |  |
Products |  | 122,229 |  | 20,447 |  | 81 |  | 3,429 |  | 146,186 |
Services |  | 43,749 |  | 16,877 |  | 22,519 |  | 3,059 |  | 86,204 |
Total |  | 165,978 |  | 37,324 |  | 22,600 |  | 6,488 |  | 232,390 |
2019 |  |  |  |  |  |  |  |  |  |  |
Products |  | 109,122 |  | 21,480 |  | 11 |  | 3,553 |  | 134,166 |
Services |  | 45,887 |  | 18,377 |  | 25,554 |  | 3,232 |  | 93,050 |
Total |  | 155,009 |  | 39,857 |  | 25,565 |  | 6,785 |  | 227,216 |
2018 |  |  |  |  |  |  |  |  |  |  |
Products |  | 96,931 |  | 20,458 |  | — |  | 4,036 |  | 121,425 |
Services |  | 41,639 |  | 17,631 |  | 25,770 |  | 4,373 |  | 89,413 |
Total |  | 138,570 |  | 38,089 |  | 25,770 |  | 8,409 |  | 210,838 |
Note B1, cont’d.
Market area 2020 |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Net sales |  |  | Non-current assets 4)
|  | Networks |  | Digital Services |  | Managed Services |  | Emerging Business and Other |  | Total |  |  | Total
South East Asia, Oceania and India |  | 21,464 |  | 4,329 |  | 4,219 |  | 36 |  | 30,048 |  |  | 812
North East Asia 3) |  | 27,120 |  | 5,124 |  | 831 |  | 259 |  | 33,334 |  |  | 2,648
North America 2) |  | 62,199 |  | 7,979 |  | 3,529 |  | 68 |  | 73,775 |  |  | 12,749
Europe and Latin America 1) |  | 33,257 |  | 11,954 |  | 10,167 |  | 367 |  | 55,745 |  |  | 49,895
Middle East and Africa |  | 13,281 |  | 6,144 |  | 3,854 |  | 19 |  | 23,298 |  |  | 140
Other 1) 2) 3) 5) |  | 8,657 |  | 1,794 |  | — |  | 5,739 |  | 16,190 |  |  | —
Total |  | 165,978 |  | 37,324 |  | 22,600 |  | 6,488 |  | 232,390 |  |  | 66,244
1) Of which in EU 5) |  |  |  |  |  |  |  |  |  | 29,501 |  |  | 48,133
Of which in Sweden 5) |  |  |  |  |  |  |  |  |  | 1,123 |  |  | 43,627
2) Of which in the United States 5) |  |  |  |  |  |  |  |  |  | 77,835 |  |  | 11,533
3) Of which in China 5) |  |  |  |  |  |  |  |  |  | 18,745 |  |  | 2,136
4) | Total non-current assets excluding financial instruments, deferred tax assets, and post-employment benefit assets.
5) | Including IPR licensing revenue reported under Other above.
Market area 2019 |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Net sales |  |  | Non-current assets 4)
|  | Networks |  | Digital Services |  | Managed Services |  | Emerging Business and Other |  | Total |  |  | Total
South East Asia, Oceania and India |  | 21,850 |  | 4,033 |  | 3,836 |  | 57 |  | 29,776 |  |  | 1,199
North East Asia 3) |  | 20,339 |  | 4,857 |  | 1,026 |  | 178 |  | 26,400 |  |  | 2,881
North America 2) |  | 55,808 |  | 9,646 |  | 4,673 |  | 96 |  | 70,223 |  |  | 11,570
Europe and Latin America 1) |  | 33,884 |  | 12,571 |  | 12,149 |  | 402 |  | 59,006 |  |  | 45,832
Middle East and Africa |  | 14,604 |  | 7,015 |  | 3,881 |  | 25 |  | 25,525 |  |  | 151
Other 1) 2) 3) 5) |  | 8,524 |  | 1,735 |  | — |  | 6,027 |  | 16,286 |  |  | —
Total |  | 155,009 |  | 39,857 |  | 25,565 |  | 6,785 |  | 227,216 |  |  | 61,633
1) Of which in EU 5) |  |  |  |  |  |  |  |  |  | 35,729 |  |  | 44,306
Of which in Sweden 5) |  |  |  |  |  |  |  |  |  | 589 |  |  | 38,313
2) Of which in the United States 5) |  |  |  |  |  |  |  |  |  | 73,279 |  |  | 10,176
3) Of which in China 5) |  |  |  |  |  |  |  |  |  | 15,860 |  |  | 2,402
4) | Total non-current assets excluding financial instruments, deferred tax assets, and post-employment benefit assets.
5) | Including IPR licensing revenue reported under Other above.
Market area 2018 |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Net sales |  |  | Non-current assets 4)
|  | Networks |  | Digital Services |  | Managed Services |  | Emerging Business and Other |  | Total |  |  | Total
South East Asia, Oceania and India |  | 21,337 |  | 4,824 |  | 3,388 |  | 40 |  | 29,589 |  |  | 445
North East Asia 3) |  | 15,915 |  | 4,849 |  | 1,465 |  | 80 |  | 22,309 |  |  | 1,833
North America 2) |  | 46,452 |  | 8,358 |  | 3,680 |  | 96 |  | 58,586 |  |  | 9,397
Europe and Latin America 1) 6) |  | 33,887 |  | 12,172 |  | 13,191 |  | 313 |  | 59,563 |  |  | 39,481
Middle East and Africa 6) |  | 13,826 |  | 6,451 |  | 4,046 |  | 15 |  | 24,338 |  |  | 50
Other 1) 2) 3) 5) |  | 7,153 |  | 1,435 |  | — |  | 7,865 |  | 16,453 |  |  | —
Total |  | 138,570 |  | 38,089 |  | 25,770 |  | 8,409 |  | 210,838 |  |  | 51,206
1) Of which in EU 5) |  |  |  |  |  |  |  |  |  | 35,941 |  |  | 38,423
Of which in Sweden 5) |  |  |  |  |  |  |  |  |  | 2,315 |  |  | 34,434
2) Of which in the United States 5) |  |  |  |  |  |  |  |  |  | 61,446 |  |  | 8,349
3) Of which in China 5) |  |  |  |  |  |  |  |  |  | 14,601 |  |  | 1,525
4) | Total non-current assets excluding financial instruments, deferred tax assets, and post-employment benefit assets.
5) | Including IPR licensing revenue reported under Other above.
6) | 2018 is restated due to a change in 2019 where sales reported on Morocco is reported on market area Middle East and Africa (earlier Europe and Latin America).

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