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					ab                                                                                                                                                 Global Equity Research
                                                                                                                                                    Sweden
                                                                                                                                                    Communications Technology
 UBS Investment Research
                                                                                                                                                    12-month rating                                                                             Neutral
 Ericsson                                                                                                                                                                                                                              Unchanged
                                                                                                                                                    12m price target                                                        SKr72.00/US$9.91
                                                                                                                                                                                                                                 Unchanged
 Takeaways from Ericsson India briefing                                                                                                             Price                                                  SKr73.80/US$10.18 (ADR)

     Confirms view of a tough market…                                                                                                               RIC: ERICb.ST BBG: ERICB SS

 Ericsson’s India briefing confirmed our view of a tough market with spending                                                                                                                                                 2 February 2010
 likely to be down meaningfully in 2010 ex the new entrants. Ericsson
 acknowledged that operators’ businesses are under pressure from falling ARPUs                                                                      Trading data (local/US$)
 due to the recent tariff wars, there is structural overcapacity at the industry level as                                                           52-wk range                                    SKr79.10-64.20/US$10.88-7.52
 there are 10-12 operators in each region and consolidation is the likely end game.                                                                 Market cap.                                                              SKr241bn/US$33.3bn
                                                                                                                                                    Shares o/s                                     3,011m (BFREE)/3,011m (ADR)
    …but some positives                                                                                                                             ADR ratio                                                                            1 ADR:1 BFREE
 Ericsson indicated that pricing has stabilized, strong subs growth continues and                                                                   Free float                                                                                                   100%
 “human” penetration is 30-40% lower than reported due to dual-SIMs. Further,
                                                                                                                                                    Avg. daily volume ('000)                                                                    15,705/5,675
 Ericsson remains well positioned due to its services capabilities which are
                                                                                                                                                    Avg. daily value (SKrm)                                                                      1,098.6/56.0
 important in a market such as India due to the opex focus of operators.
                                                                                                                                                    Balance sheet data 12/10E
     The great 3G wait continues
                                                                                                                                                    Shareholders' equity                                                                                SKr147bn
 Ericsson indicated that the timeframe for 3G auctions has likely slipped to Aug/Sep
 and that there will be a 6-9 month lead time from spectrum grant to service launch.                                                                P/BV (UBS)                                                                                                        1.6x
 Initial 3G use is likely to be to offset spectrum shortages for voice in urban areas,                                                              Net Cash (debt)                                                                                     SKr49.5bn
 and we believe the business case for any mass 3G deployment is likely to be
                                                                                                                                                    Forecast returns
 limited outside the large metros. We believe 3G is increasingly looking like a 2011
 story now and even so we would not expect a massive pick up in capex.                                                                              Forecast price appreciation                                                                                  -2.4%
                                                                                                                                                    Forecast dividend yield                                                                                        2.5%
     Valuation – maintain Neutral rating and SEK72 price target                                                                                     Forecast stock return                                                                                        +0.1%
 We believe that Ericsson lacks catalysts in the short term and while the valuation is                                                              Market return assumption                                                                                       5.4%
 supportive, newsflow around operator capex is likely to continue to be negative                                                                    Forecast excess return                                                                                       -5.3%
 through the reporting season. Our price target is DCF-based (9% WACC, 2% g).
                                                                                                                                                    EPS (UBS, SKr)
                                                                                                                                                                                                           12/10E                                                 12/09
                                                                                                                                                                                          UBS                                           Cons.                    Actual
                                                                                                                                                    Q1E                                   1.07                                           0.95                      0.71
                                                                                                                                                    Q2E                                   1.28                                           1.17                      0.91
 Highlights (SKrm)                                      12/08                12/09              12/10E               12/11E              12/12E
                                                                                                                                                    Q3E                                   1.11                                           1.23                      0.88
 Revenues                                             208,930              206,477             209,811              217,246             222,878
                                                                                                                                                    Q4E                                   1.84                                           1.79                      1.27
 EBIT (UBS)                                            22,469               23,777              24,185               25,514              25,910
                                                                                                                                                    12/10E                                5.30                                           5.35
 Net Income (UBS)                                      15,996               12,036              16,919               19,284              20,589
                                                                                                                                                    12/11E                                6.04                                           6.27
 EPS (UBS, SKr)                                          5.03                 3.77                5.30                 6.04                6.45
 Net DPS (UBS, SKr)                                      1.85                 1.31                1.84                 2.10                2.24     Performance (SKr)
                                                                                                                                                             Stock Price (SKr)                                                         Rel. FT/S&P AWI Europe
 Profitability & Valuation                       5-yr hist av.                12/09              12/10E              12/11E               12/12E    200                                                                                                                   120

 EBIT margin %                                           15.7                  11.5                11.5                11.7                 11.6    150
                                                                                                                                                                                                                                                                          100

                                                                                                                                                                                                                                                                          80
 ROIC (EBIT) %                                           43.3                  24.7                25.6                26.3                 25.9
                                                                                                                                                    100                                                                                                                   60
 EV/EBITDA (core) x                                        8.9                  5.8                  6.4                 5.8                  5.5
                                                                                                                                                                                                                                                                          40
 PE (UBS) x                                              16.4                  18.7                13.9                12.2                 11.4     50
                                                                                                                                                                                                                                                                          20
 Net dividend yield %                                      2.0                  1.9                  2.5                 2.8                  3.0     0                                                                                                                   0
                                                                                                                                                          01/07

                                                                                                                                                                  04/07

                                                                                                                                                                          07/07

                                                                                                                                                                                  10/07

                                                                                                                                                                                           01/08

                                                                                                                                                                                                   04/08

                                                                                                                                                                                                            07/08

                                                                                                                                                                                                                    10/08

                                                                                                                                                                                                                               01/09

                                                                                                                                                                                                                                        04/09

                                                                                                                                                                                                                                                07/09

                                                                                                                                                                                                                                                         10/09

                                                                                                                                                                                                                                                                  01/10




 Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items.
 Valuations: based on an average share price that year, (E): based on a share price of SKr73.80 on 02 Feb 2010 17:04 EST                                            Price Target (SKr) (LHS)                                Stock Price (SKr) (LHS)
                                                                                                                                                                    Rel. FT/S&P AWI Europe (RHS)

                                                                                                                                                    Source: UBS
 Gareth Jenkins                                   Anuj Krishan                                     Maynard J. Um                                                                               www.ubs.com/investmentresearch
 Analyst                                          Analyst                                          Analyst
 gareth.jenkins@ubs.com                           anuj.krishan@ubs.com                             maynard.um@ubs.com
 +44-20-7567 3950                                 +44 20756 87105                                  +1-212-713 3372




 This report has been prepared by UBS Limited
 ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 8.
 UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
 have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making
 their investment decision.
Ericsson 2 February 2010


Ericsson India Briefing
Presentation notes
   Overall economic growth of >7%, strong macro situation

   Telecom companies being pressured due to tariff wars

   10-12 operators in each geography, fragmented telecom market

   Net adds very high, Dec saw c.19m new subs added

   MNP and 3G auction, next major events

   Mobile penetration still significantly below other markets and fixed line even
   more abysmally low

   Data as % of revs still single digit 7-8%, so lots of potential

   ARPU levels one of the lowest

   VAS in the future and 3G, there is headroom for ARPU going up

   New operators just setup. But some getting good subs traction e.g. Uninor

   Still robust and buoyant growth

   Over last 6 months, subs up 10% but gross revenues down c.1%. Tariff wars
   forcing revenues to come down

   EBITDA margins also coming down due to the tariff wars

   Tata, Shyam Sistema etc. introduced aggressive tariffs

   Existing operators cautious on future investments, but new entrants rolling
   out aggressively

   Some over capacity in urban areas and some rural coverage deferred

   3G auctions slipping. Could slip into Aug/Sep timeframe. So private
   operators’ roll-out could be Q1 2011. BSNL already has spectrum and
   rolling out on a small scale.

   3 slots of 5MHz in 2.1GHz band given to 3 successful bidders. 2 slots in
   2.3GHz BWA – lots of interest and also interest for TD-LTE

   Multiple SIMs phenomena and customers use connections for temp period of
   time based on best tariff available

   Deep rural roll-outs viable business or not, questions being asked

   A lot of opex on diesel generator sets to power BTS due to electricity grid
   issues and opex, site costs reduction also very imp

   Ericsson has largest prepaid footprint – 150m subs, converged billing
   solutions from LHS acquisition

   Driving up VAS, hosting solutions e.g. PRBT



                                                                                    UBS 2
Ericsson 2 February 2010


   Creating a 3G ecosystem, exploring vertical solutions with colleges,
   hospitals etc.

   Ericsson still investing in 2G platforms, features to reduce site count by 25-
   30%

   R&D investments in 2G implies can drive more capacity per MHz of
   spectrum

   Working on tech that reduces site costs, pioneers of passive and active
   sharing concept in India, v. important for rural India as opex high without
   this

   Zero footprint products, i.e. BTS that can be mounted on existing chassis or
   wall mounted, reduce space required in existing shelters

   Rural India places either off-grid or unreliable power that require 14-16hrs of
   backup power. Blue battery – 1/5th recharge time of normal batteries, 15%
   lower power per BTS (goes into sleep mode when no traffic), reduce site
   cooling requirements

   Microwave solutions as fiber not there. Microwave has a spectrum cost, and
   if can drive more bandwidth on microwave then reduce costs for operators

   Capable of multi vendor managed services

   First MNC to manufacture GSM BTS in India, can do up to 8500
   BTS/month

   Over 400 employees in R&D – Gurgaon and Chennai

   Services Center handling 7 customers across 20 countries

   Already working with BSNL as their largest supplier of 3G equipment



Q&A

Q/ Spectrum thin in various circles? How will 3G spectrum be utilized?
Subs/traffic growth or data? Time lag between auctions and spectrum award and
services?

A/ There are pockets of urban pockets with spectrum limitation. So will begin
with voice offset. 120m subs of GPRS/EDGE services. Thinking right now is
that if spectrum cannot be given immediately after auctions then delay the
auctions. 6-9 months lag from allocation of spectrum to service launch.

Q/ Urban areas excess capacity, but tight spectrum? Contradiction? Capacity
dynamics right now?

A/ 10-12 networks rolled out in urban India. New operators roll out initially in
urban areas. Individually operators have limited capacity/spectrum but overall
industry has overcapacity.

Q/ GSM vs. CDMA split and growth rates?


                                                                                     UBS 3
Ericsson 2 February 2010


A/ CDMA as a % of total coming down to global avg of 13-14%. Reliance and
Tata two large CDMA players and MTS Sistema now rolling out.

Q/ Which carriers more aggressive in bidding for 3G spectrum?

A/ All with deep pockets. Can’t predict.

Q/ ARPU coming down, how do you see that playing out?

A/ Indicators seem to point in the direction of consolidation. Cant say how soon
it will happen as most large players.

Q/ Market share trends? Ericsson established position at VOD, Bharti, BSNL.
Not very successful at new ops such as Idea, Uninor etc. 3G. Maintain market
share?

A/ Have made significant progress with new ops as well. Etisalat, Uninor and
Idea – nudging to #1 slot. 2G historical levels of 40% mark. Given embedded
base and R&D investments, it is significant value proposition for operators to
continue using Ericsson.

Q/ Update on 3G at BSNL? Phase 1 largely done and revenues going down?

A/ Phase 1 roll-out getting completed. On an overall business BSNL starving for
capacity. Need to make a determination on the current tender. Either award that
contract or give expansion orders to existing vendors.

Q/ Many consumers opt to have several SIM cards to play on diff tariffs. So
SIMs/subs does not equal human subs/phones?

A/ That’s right. 30-40% overstatement of subs perspective. Dual-SIM phones
available.

Q/ Datacards state of play?

A/ Most GPRS connections on phones. Huge latent demand but 8-10m right
now. EDGE and CDMA both. WiFi/DSL at home and no connectivity issues in
offices.

Q/ Smartphones? Replacement rates? Apps market?

A/ 3G ready phones going up, 15-18m handsets 3G ready. 25-30% in 6 months
will be 3G ready phones.

Q/ Type of apps driving to 3G? Text centric/SMS right now.

A/ 3 broad areas apart from Web search – music, bollywood, sports. Gaming
also surprisingly getting popular on the wireline side.

Q/ Handset subsidies as roll out 3G?

A/ Till couple of years back there were regulatory issues inhibiting bundling and
low cost handsets were available. But with 3G, operators might be tempted to
offer subsidies to retain high value customers.

Q/ Dominant 3G tech?



                                                                                    UBS 4
Ericsson 2 February 2010


A/ WCDMA.HSPA Ppl say 4G will come later to India but not so sure about
this as 2.3GHz auction also.

Q/ Capex intensity right now? With EBITDA margins and ARPU declines?

A/ Industry as a whole capex still buoyant as new entrants rolling out. Right that
operators have structurally higher capex in light of lower ARPUs.

Q/ India in 2010 if 3G postponed, Bharti VOD lowering capex, over capacity
etc? Slow down in 2010?

A/ Still stable as new operators rolling out. Can have 800m subs on 2G so more
investment required.

Q/ Effect of 3G auctions delayed, some pent up demand to spend on 2G
capacity?

A/ Yes, some pent up demand and rural coverage. But new players in catch-up
mode on coverage.

Q/ India spent very less on equipment despite? Can it become more as a % of
overall equipment market?

A/ China geog coverage 98-99% pop coverage, lot more carpet coverage vs.
India. India is early 80%s. That’s one reason. Networks in India as current as
anywhere else. Indian cos have very high technical knowledge, invest in the
latest and foreign operator owners have knowledge also relatively new networks.

Q/ Local manufacturing details?

A/ Keep exploring options.

Q/ How imp is it to be #1 in Indian market?

A/ To invest early in the market has helped to reach the #1 in market. New
operators perception and reality of Ericsson being #1 helped them to easily
select Ericsson.

Q/ TD-LTE timeline and 3G timeline and operators think of skipping 3G
straight to 4G?

A/ Already 3G handsets available, ecosystem there, scale benefit there.
Compelling proposition for operators. 3G required from end consumer
perspective. TD-LTE has increasing momentum because of global operators
choosing it and over time provides interesting tech option. 3G very hot as we
speak to operators.

Q/ First round of BSNL rollout was public RFP and back and forth and very low
prices. 2nd round RFP and other RFPs pricing?

A/ Prices have stabilized in the Indian context. Competition there but steep drop
seen 3-4 years ago not there. More players 3-4 years ago and consolidation has
happened since then. More fiscal responsibility among players and pricing better.




                                                                                     UBS 5
Ericsson

  Income statement (SKrm)                                    12/05                12/06               12/07                12/08                12/09              12/10E        % ch               12/11E           % ch     12/12E      % ch
  Revenues                                                  151,821             179,821              187,780              208,930             206,477              209,811          1.6             217,246            3.5     222,878       2.6
  Operating expenses (ex depn)                            (115,430)           (142,411)            (156,003)            (183,570)           (185,335)            (180,382)         -2.7           (184,780)            2.4   (190,058)       2.9
  EBITDA (UBS)                                               36,391              37,410               31,777               31,141              31,601               31,529         -0.2              32,466            3.0      32,819       1.1
  Depreciation                                               (5,702)             (7,516)              (8,363)              (8,672)             (7,824)              (7,343)        -6.1              (6,952)          -5.3      (6,909)     -0.6
  Operating income (EBIT, UBS)                               30,689              29,894               23,414               22,469              23,777               24,185          1.7              25,514            5.5      25,910       1.6
  Other income & associates                                    2,394               5,934                7,232                (436)             (7,400)              (1,759)       -76.2                  673             -        2,065    206.9
  Net interest                                                   251                 165                   83                  974                 325                  777       138.9                  777           0.0          777      0.0
  Abnormal items (pre-tax)                                         0                   0                    0              (5,781)           (10,459)               (2,100)       -79.9                    0             -            0        -
  Profit before tax                                          33,334              35,993               30,729               17,226                6,243              21,103        238.1              26,964           27.8      28,752       6.6
  Tax                                                        (8,875)             (9,557)              (8,594)              (5,559)             (2,116)              (5,276)       149.3              (7,280)          38.0      (7,763)      6.6
  Profit after tax                                           24,459              26,436               22,135               11,667                4,127              15,828        283.5              19,684           24.4      20,989       6.6
  Abnormal items (post-tax)                                        0                   0                    0                    0                   0                    0           -                    0             -            0        -
  Minorities / pref dividends                                  (145)               (185)                (299)                (394)               (455)                (400)       -12.1                (400)           0.0        (400)      0.0
  Net income (local GAAP)                                    24,314              26,251               21,836               11,273                3,672              15,428        320.2              19,284           25.0      20,589       6.8
  Net Income (UBS)                                           23,690              26,251               21,836               15,996              12,036               16,919         40.6              19,284           14.0      20,589       6.8

  Tax rate (%)                                                    27                  27                   28                   32                  34                   25       -26.2                   27           8.0          27       0.0
  Pre-abnormal tax rate (%)                                       31                  32                   37                   28                  17                   24        35.0                   28          17.5          29       5.0

  Per share (SKr)                                            12/05                12/06               12/07                12/08                12/09              12/10E        % ch               12/11E           % ch     12/12E      % ch
  EPS (local GAAP)                                             7.67                 8.27                6.87                 3.54                 1.15                 4.83       319.3                 6.04          25.0        6.45       6.8
  EPS (UBS)                                                    7.47                 8.27                6.87                 5.03                 3.77                 5.30        40.3                 6.04          14.0        6.45       6.8
  Net DPS                                                      2.25                 2.50                2.50                 1.85                 1.31                 1.84        40.3                 2.10          14.0        2.24       6.8
  Cash EPS                                                     9.27                10.64                9.50                 7.75                 6.23                 7.60        22.0                 8.21           8.1        8.61       4.8
  BVPS                                                        34.93                41.28               46.09                48.40                43.79                45.93         4.9                48.13           4.8       52.04       8.1

  Balance sheet (SKrm)                                       12/05                12/06               12/07                12/08                12/09              12/10E        % ch               12/11E           % ch     12/12E      % ch
  Net tangible fixed assets                                  11,889               12,932              13,972               16,067               13,269              11,171        -15.8              10,193           -8.8       9,970      -2.2
  Net intangible fixed assets                                32,981               41,032              62,135               63,104               62,520              64,901          3.8              67,367            3.8      69,896       3.8
  Net working capital (incl. other assets)                    4,679               20,646              28,611               24,945               22,355              24,444          9.3              25,818            5.6      26,507       2.7
  Other liabilities                                         (4,035)              (3,852)             (4,881)              (4,671)              (4,766)             (4,766)          0.0             (4,766)            0.0     (4,766)       0.0
  Operating invested capital                                 45,514               70,758              99,837               99,445               93,378              95,750          2.5              98,612            3.0    101,608        3.0
  Investments                                                 6,313                9,409              10,903                7,988               11,578              11,578          0.0              11,578            0.0      11,578       0.0
  Total capital employed                                     51,827               80,167            110,740              107,433              104,956             107,328           2.3            110,190             2.7    113,186        2.7
  Shareholders' equity                                     101,622              120,113             134,112              140,823              139,870             146,716           4.9            153,734             4.8    166,210        8.1
  Minority interests                                            850                  782                 940                1,261                1,157               1,557         34.6               1,957           25.7       2,357      20.4
  Total equity                                             102,472              120,895             135,052              142,084              141,027             148,273           5.1            155,691             5.0    168,567        8.3
  Net debt / (cash)                                        (56,536)             (47,696)            (30,500)             (44,524)             (44,604)            (49,478)         10.9            (54,034)            9.2    (63,915)      18.3
  Debt deemed provisions                                      5,891                6,968               6,188                9,873                8,533               8,533          0.0               8,533            0.0       8,533       0.0
  Total capital employed                                     51,827               80,167            110,740              107,433              104,956             107,328           2.3            110,190             2.7    113,186        2.7

  Cash flow (SKrm)                                           12/05                12/06               12/07                12/08                12/09              12/10E        % ch               12/11E           % ch     12/12E      % ch
  Operating income (EBIT, UBS)                               30,689               29,894              23,414               22,469               23,777              24,185         1.7               25,514            5.5     25,910        1.6
  Depreciation                                                5,702                7,516               8,363                8,672                7,824                7,343       -6.1                6,952           -5.3       6,909      -0.6
  Net change in working capital                            (10,183)             (11,930)            (11,948)             (10,982)               12,477              (2,089)          -              (1,374)          -34.2       (689)     -49.9
  Other (operating)                                         (3,641)              (6,122)               1,492               24,034             (12,781)                  259          -                  (26)             -       (965)    3562.0
  Operating cash flow                                        22,567               19,359              21,321               44,193               31,297              29,698        -5.1               31,065            4.6     31,166        0.3
  Net interest received / (paid)                                251                  165                  83                  974                  325                  777      138.9                  777            0.0         777       0.0
  Dividends paid                                            (4,133)              (7,343)             (8,132)              (8,240)              (6,318)              (8,440)       33.6             (11,839)           40.3     (6,747)     -43.0
  Tax paid                                                  (8,875)              (9,557)             (8,594)              (4,527)              (3,127)              (5,276)       68.7              (7,280)           38.0     (7,763)       6.6
  Capital expenditure                                       (4,539)              (5,180)             (5,372)              (5,542)              (5,449)              (7,626)       40.0              (8,440)           10.7     (9,216)       9.2
  Net (acquisitions) / disposals                              (957)             (14,992)            (26,208)                1,836             (17,505)                    0          -                     0             -           0         -
  Other                                                       5,750                2,705              25,218              (8,215)             (27,727)              (4,259)      -84.6                  273              -       1,665     510.0
  Share issues                                                  117                   58                   0              (4,607)                    0                    0          -                     0             -           0         -
  Cash flow (inc)/dec in net debt                            10,181             (14,786)             (1,684)               15,872             (28,504)                4,874          -                4,556           -6.5       9,881     116.9
  FX / non cash items                                       (6,643)                5,946            (15,512)              (1,848)               28,584                    0          -                     0             -           0         -
  Balance sheet (inc)/dec in net debt                         3,538              (8,840)            (17,196)               14,024                   80                4,874     5992.3                4,556           -6.5       9,881     116.9
  Core EBITDA                                                36,391               37,410              31,777               31,141               31,601              31,529        -0.2               32,466            3.0     32,819        1.1

  Maintenance capital expenditure                           (4,539)              (5,180)             (5,372)              (5,542)              (5,449)              (7,626)        40.0              (8,440)          10.7     (9,216)       9.2
  Maintenance net working capital                           (4,117)              (7,700)            (10,859)              (9,019)              14,724                   157       -98.9                  872         453.8       1,558      78.6
  Operating free cash flow, pre-tax                          27,735              24,530               15,546               16,580              40,876               24,060        -41.1              24,899            3.5     25,161        1.1
Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items. Note: For some companies, the data represents an extract of the full company accounts.




                                                                                                                                                                                                                                 UBS 6
Global Equity Research
Sweden

Communications Technology                                                                                                                                                                                                                Ericsson
12-month rating                                                                                  Neutral
12m price target                                                                                  SKr72.00            Valuation (x)                                               5Yr Avg           12/08           12/09        12/10E         12/11E         12/12E
                                                                                                                      P/E (local GAAP)                                                  17.3           18.5           61.6           15.4           12.3           11.5
                                                                                                                      P/E (UBS)                                                         16.4           13.0           18.7           13.9           12.2           11.4
                                                                                                                      P/CEPS                                                            12.1            8.4           11.3            9.7            9.0            8.6
                                                                                                                      Net dividend yield (%)                                             2.0            2.8            1.9            2.5            2.8            3.0
Company profile                                                                                                       P/BV                                                               2.9            1.3            1.6            1.6            1.5            1.4
Ericsson is a leading manufacturer of wireless communication                                                          EV/revenue (core)                                                  1.7            0.8            0.9            1.0            0.9            0.8
equipment, with over 30% market share globally in 2008. It is                                                         EV/EBITDA (core)                                                   8.9            5.7            5.8            6.4            5.8            5.5
organised into three main divisions: networks (68% of revenues in                                                     EV/EBIT (core)                                                    11.5            7.9            7.7            8.3            7.3            6.9
2008), professional services (23%) and multimedia (9%). Networks is                                                   EV/OpFCF (core)                                                   13.3           10.6            4.5            8.3            7.5            7.1
the equipment business, with the majority of sales from wireless                                                      EV/op. invested capital                                            5.0            1.8            1.9            2.1            1.9            1.8
infrastructure and a smaller portion from fixed-line. Professional
services provides consulting, systems integration and managed                                                         Enterprise value (SKrm)                                                       12/08           12/09        12/10E         12/11E         12/12E
services to telecom operators. Through its 50%-owned JVs, Sony                                                        Average market cap                                                          206,706         223,479        241,255        241,255        241,255
Ericsson and ST-Ericsson, Ericsson also participates in the handsets                                                  + minority interests                                                             394             455            400            400            400
and communications semis markets.                                                                                     + average net debt (cash)                                                   (37,512)        (44,564)       (44,564)       (51,756)       (58,974)
                                                                                                                      + pension obligations and other                                                9,873           8,533          8,533          8,533          8,533
                                                                                                                      - non-core asset value                                                       (2,967)         (5,132)        (5,132)       (11,578)       (11,578)
                                                                                                                      Core enterprise value                                                       176,494         182,772        200,492        186,854        179,635

                                                                                                                      Growth (%)                                                  5Yr Avg           12/08           12/09        12/10E         12/11E         12/12E
Value (EV/OpFCF & P/E)                                                                                                Revenue                                                           12.2           11.3           -1.2            1.6            3.5                2.6
   12.0x                                                                                                   20.0x
                                                                                                                      EBITDA (UBS)                                                      -0.2           -2.0            1.5           -0.2            3.0                1.1
   10.0x
                                                                                                                      EBIT (UBS)                                                        -2.0           -4.0            5.8            1.7            5.5                1.6
    8.0x
                                                                                                           15.0x      EPS (UBS)                                                         -1.4          -26.9          -24.9           40.3           14.0                6.8
    6.0x                                                                                                   10.0x
                                                                                                                      Cash EPS                                                           0.8          -18.4          -19.7           22.0            8.1                4.8
    4.0x
                                                                                                                      Net DPS                                                           10.3          -26.0          -29.1           40.3           14.0                6.8
    2.0x
                                                                                                           5.0x       BVPS                                                              15.0            5.0           -9.5            4.9            4.8                8.1
    0.0x                                                                                                   0.0x
           12/08                12/09              12/10E                     12/11E                    12/12E        Margins (%)                                                 5Yr Avg           12/08           12/09        12/10E         12/11E         12/12E
                                    EV/OpFCF (LHS)        P/E (RHS)
                                                                                                                      EBITDA / revenue                                                  20.1           14.9           15.3           15.0           14.9           14.7
                                                                                                                      EBIT / revenue                                                    15.7           10.8           11.5           11.5           11.7           11.6
                                                                                                                      Net profit (UBS) / revenue                                        12.4            7.7            5.8            8.1            8.9            9.2
Profitability
  11.80%                                                                                                   27.00%     Return on capital (%)                                         5Yr Avg           12/08          12/09        12/10E         12/11E         12/12E
  11.60%                                                                                                   26.00%     EBIT ROIC (UBS)                                                  43.3            22.5           24.7          25.6           26.3           25.9
  11.40%
                                                                                                           25.00%     ROIC post tax                                                       -            16.2           20.4          19.5           19.0           18.4
  11.20%
                                                                                                           24.00%     Net ROE                                                          20.5            11.6            8.6          11.8           12.8           12.9
  11.00%
                                                                                                           23.00%
  10.80%
                                                                                                           22.00%
                                                                                                                      Coverage ratios (x)                                           5Yr Avg           12/08          12/09        12/10E         12/11E         12/12E
  10.60%
  10.40%                                                                                                   21.00%
                                                                                                                      EBIT / net interest                                                 -               -              -              -              -              -
                   12/08          12/09           12/10(E)             12/11(E)              12/12(E)
                                                                                                                      Dividend cover (UBS EPS)                                          3.3             2.7            2.9            2.9            2.9            2.9
                                  EBIT margin (LHS)              ROIC (RHS)
                                                                                                                      Div. payout ratio (%, UBS EPS)                                   31.4            36.8           34.8          34.7           34.7           34.7
                                                                                                                      Net debt / EBITDA                                                 NM              NM             NM            NM             NM             NM
ROE v Price to book value
                                                                                                                      Efficiency ratios (x)                                         5Yr Avg           12/08          12/09        12/10E         12/11E         12/12E
  13.00%                                                                                                   1.7x
                                                                                                                      Revenue / op. invested capital                                    2.8             2.1            2.1            2.2            2.2            2.2
  12.00%                                                                                                   1.6x       Revenue / fixed assets                                            3.0             2.7            2.7            2.8            2.8            2.8
  11.00%
                                                                                                           1.5x       Revenue / net working capital                                    16.8             7.8            8.7            9.0            8.6            8.5
  10.00%
                                                                                                           1.4x
  9.00%                                                                                                               Investment ratios (x)                                         5Yr Avg           12/08          12/09        12/10E         12/11E         12/12E
  8.00%                                                                                                    1.3x       OpFCF / EBIT                                                      0.9             0.7            1.7            1.0            1.0            1.0
  7.00%                                                                                                    1.2x       Capex / revenue (%)                                               2.8             2.7            2.6            3.6            3.9            4.1
                   12/08          12/09           12/10(E)             12/11(E)              12/12(E)

                             ROE (LHS)                           Price to book value (RHS)
                                                                                                                      Capex / depreciation                                              0.7             0.6            0.7            1.0            1.2            1.3

                                                                                                                      Capital structure (%)                                         5Yr Avg          12/08          12/09         12/10E         12/11E         12/12E
Growth (UBS EPS)                                                                                                      Net debt / total equity                                         (40.2)         (31.6)         (31.9)         (33.7)         (35.1)         (38.5)
                                                                                                                      Net debt / (net debt + equity)                                  (67.3)         (46.2)         (46.8)         (50.9)         (54.2)         (62.5)
    225000
                                                                                                                      Net debt (core) / EV                                            (16.1)         (21.3)         (24.4)         (22.2)         (27.7)         (32.8)
                                                                                                           38.6%
    220000
                                                                                                           27.1%
                                                                                                                    Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items.
    215000                                                                                                 15.7%
                                                                                                                    Valuations: based on an average share price that year, (E): based on a share price of SKr73.80 on 02 Feb 2010 17:04 EST Market cap(E) may include
                                                                                                                    forecast share issues/buybacks.
    210000                                                                                                 4.3%
                                                                                                           -7.1%
    205000
                                                                                                           -18.6%
    200000                                                                                                 -30.0%
                                                                                                                    Gareth Jenkins                                    Anuj Krishan                                      Maynard J. Um
                     12/08          12/09             12/10(E)           12/11(E)            12/12(E)

                              Revenue (LHS)                      UBS EPS Growth (RHS)
                                                                                                                    Analyst                                           Analyst                                           Analyst
                                                                                                                    gareth.jenkins@ubs.com                            anuj.krishan@ubs.com                              maynard.um@ubs.com
                                                                                                                    +44-20-7567 3950                                  +44 20756 87105                                   +1-212-713 3372




                                                                                                                                                                                                                                                      UBS 7
Ericsson 2 February 2010




   Ericsson

Ericsson is a leading manufacturer of wireless communication equipment, with
over 30% market share globally in 2008. It is organised into three main
divisions: networks (68% of revenues in 2008), professional services (23%) and
multimedia (9%). Networks is the equipment business, with the majority of sales
from wireless infrastructure and a smaller portion from fixed-line. Professional
services provides consulting, systems integration and managed services to
telecom operators. Through its 50%-owned JVs, Sony Ericsson and ST-Ericsson,
Ericsson also participates in the handsets and communications semis markets.




   Statement of Risk

Upside risks to Ericsson include gaining a more benign pricing environment
following consolidation, improving mix back towards software/expansions,
significant data traffic growth and placing a public cap on acquisitions.
Downside risks include key operator customers cutting capex further, delays in
spending due to network sharing, and the further aggressive moves by the
Chinese vendors in developed markets.



   Analyst Certification

Each research analyst primarily responsible for the content of this research
report, in whole or in part, certifies that with respect to each security or issuer
that the analyst covered in this report: (1) all of the views expressed accurately
reflect his or her personal views about those securities or issuers; and (2) no part
of his or her compensation was, is, or will be, directly or indirectly, related to
the specific recommendations or views expressed by that research analyst in the
research report.




                                                                                       UBS 8
Ericsson 2 February 2010


Required Disclosures

This report has been prepared by UBS Limited, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates
are referred to herein as UBS.

For information on the ways in which UBS manages conflicts and maintains independence of its research product;
historical performance information; and certain additional disclosures concerning UBS research recommendations,
please visit www.ubs.com/disclosures. The figures contained in performance charts refer to the past; past performance is
not a reliable indicator of future results. Additional information will be made available upon request.

UBS Investment Research: Global Equity Rating Allocations
                                                                                              1                                2
 UBS 12-Month Rating            Rating Category                                     Coverage                      IB Services
 Buy                            Buy                                                       48%                             40%
 Neutral                        Hold/Neutral                                              40%                             35%
 Sell                           Sell                                                      13%                             26%
                                                                                              3                               4
 UBS Short-Term Rating          Rating Category                                     Coverage                      IB Services
 Buy                            Buy                                               less than 1%                            17%
 Sell                           Sell                                              less than 1%                            67%
1:Percentage of companies under coverage globally within the 12-month rating category.
2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within
the past 12 months.
3:Percentage of companies under coverage globally within the Short-Term rating category.
4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided
within the past 12 months.

Source: UBS. Rating allocations are as of 31 December 2009.
UBS Investment Research: Global Equity Rating Definitions
 UBS 12-Month Rating            Definition
 Buy                            FSR is > 6% above the MRA.
 Neutral                        FSR is between -6% and 6% of the MRA.
 Sell                           FSR is > 6% below the MRA.
 UBS Short-Term Rating          Definition
                                Buy: Stock price expected to rise within three months from the time the rating was assigned
 Buy
                                because of a specific catalyst or event.
                                Sell: Stock price expected to fall within three months from the time the rating was assigned
 Sell
                                because of a specific catalyst or event.




                                                                                                                          UBS 9
Ericsson 2 February 2010


KEY DEFINITIONS
 Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12
months.
 Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a
forecast of, the equity risk premium).
 Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are
subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation.
 Short-Term Ratings reflect the expected near-term (up to three months) performance of the stock and do not reflect any
change in the fundamental view or investment case.
Equity Price Targets have an investment horizon of 12 months.

EXCEPTIONS AND SPECIAL CASES
UK and European Investment Fund ratings and definitions are: Buy: Positive on factors such as structure, management,
performance record, discount; Neutral: Neutral on factors such as structure, management, performance record, discount; Sell:
Negative on factors such as structure, management, performance record, discount.
Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the Investment Review
Committee (IRC). Factors considered by the IRC include the stock's volatility and the credit spread of the respective company's
debt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating.
When such exceptions apply, they will be identified in the Company Disclosures table in the relevant research piece.



Research analysts contributing to this report who are employed by any non-US affiliate of UBS Securities LLC are not
registered/qualified as research analysts with the NASD and NYSE and therefore are not subject to the restrictions contained in
the NASD and NYSE rules on communications with a subject company, public appearances, and trading securities held by a
research analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if any,
follows.
UBS Limited: Gareth Jenkins; Anuj Krishan. UBS Securities LLC: Maynard J. Um.


Company Disclosures
 Company Name                                 Reuters      12-mo rating Short-term rating                Price        Price date
          15, 16
 Ericsson                                    ERICb.ST           Neutral              N/A              SKr74.35       01 Feb 2010
Source: UBS. All prices as of local market close.
Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricing
date

15.    UBS AG, its affiliates or subsidiaries has issued a warrant the value of which is based on one or more of the financial
       instruments of this company.
16.    UBS Securities LLC makes a market in the securities and/or ADRs of this company.


Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report.




                                                                                                                             UBS 10
Ericsson 2 February 2010


Ericsson (SKr)
                                                                                                        Price Target (SKr)                               Stock Price (SKr)
             200

             150

             100

              50

               0
                    01-Jan-05

                                01-Apr-05

                                            01-Jul-05

                                                        01-Oct-05

                                                                    01-Jan-06

                                                                                01-Apr-06

                                                                                            01-Jul-06

                                                                                                         01-Oct-06

                                                                                                                     01-Jan-07

                                                                                                                                 01-Apr-07

                                                                                                                                             01-Jul-07

                                                                                                                                                            01-Oct-07

                                                                                                                                                                        01-Jan-08

                                                                                                                                                                                    01-Apr-08

                                                                                                                                                                                                01-Jul-08

                                                                                                                                                                                                            01-Oct-08

                                                                                                                                                                                                                        01-Jan-09

                                                                                                                                                                                                                                    01-Apr-09

                                                                                                                                                                                                                                                01-Jul-09

                                                                                                                                                                                                                                                            01-Oct-09

                                                                                                                                                                                                                                                                        01-Jan-10
           Buy 2
        Neutral 2
          Neutral
             Sell
        No Rating


Source: UBS; as of 01 Feb 2010


Note: On August 4, 2007 UBS revised its rating system. (See 'UBS Investment Research: Global Equity Rating Definitions' table
for details). From September 9, 2006 through August 3, 2007 the UBS ratings and their definitions were: Buy 1 = FSR is > 6%
above the MRA, higher degree of predictability; Buy 2 = FSR is > 6% above the MRA, lower degree of predictability; Neutral 1 =
FSR is between -6% and 6% of the MRA, higher degree of predictability; Neutral 2 = FSR is between -6% and 6% of the MRA,
lower degree of predictability; Reduce 1 = FSR is > 6% below the MRA, higher degree of predictability; Reduce 2 = FSR is > 6%
below the MRA, lower degree of predictability. The predictability level indicates an analyst's conviction in the FSR. A
predictability level of '1' means that the analyst's estimate of FSR is in the middle of a narrower, or smaller, range of possibilities.
A predictability level of '2' means that the analyst's estimate of FSR is in the middle of a broader, or larger, range of possibilities.
From October 13, 2003 through September 8, 2006 the percentage band criteria used in the rating system was 10%.




                                                                                                                                                                                                                                                                                    UBS 11
Ericsson 2 February 2010




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