Ericsson — Foreign Filer Report 2015

Oct 23, 2015

6-K 1 d78707d6k.htm FORM 6-K Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

October 23, 2015

Commission File Number

000-12033

LM ERICSSON TELEPHONE COMPANY

(Translation of registrant’s name into English)

Torshamnsgatan 21, Kista

SE-164 83, Stockholm, Sweden

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F x Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

Announcement of LM Ericsson Telephone Company, October 23, 2015 regarding “Ericsson reports third quarter results 2015”.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

T ELEFONAKTIEBOLAGET LM E RICSSON (publ)
By:	/s/ NINA
MACPHERSON
	Nina Macpherson
	Senior Vice President and
	General Counsel
By:	/s/ HELENA
NORRMAN
	Helena Norrman
	Senior Vice President
	Corporate Marketing & Communications Officer

Date: October 23, 2015

ERICSSON THIRD QUARTER REPORT 2015 Stockholm, October 23, 2015 Read more THIRD QUARTER HIGHLIGHTS (page) > Reported sales increased by 3% YoY. Sales, adjusted for comparable units and currency, decreased by -9% due to lower sales in Networks. This was partly offset by sales growth in Professional Services. 3 > The mobile broadband business in North America remained stable QoQ, but at a lower level compared to the same period last year. 3 > Reported sales in Networks declined sequentially impacted by a slowdown of the 4G deployments in Mainland China. 6 > Gross margin declined YoY to 33.9% (35.2%). Excluding restructuring charges, gross margin decreased to 34.5% (35.5%) due to a higher share of Global Services sales. 3 > The global cost and efficiency program is progressing according to plan, contributing to lower cost level YoY. 3 > Operating margin, excluding restructuring charges, improved YoY to 10% (7%). Network Rollout, within Global Services, reached a break-even result. 4 > Cash flow from operating activities was SEK 1.6 (-1.4) b. 9 Q3 Q3 YoY Q2 QoQ 9 months 9 months SEK b. 2015 2014 change 2015 change 2015 2014 Net sales 59.2 57.6 3% 60.7 -2% 173.4 160.0 Sales growth adj. for comparable units and currency - - -9% - -2% -7% -2% Gross margin 33.9% 35.2% - 33.2% - 34.1% 36.0% Gross margin excluding restructuring charges 34.5% 35.5% - 35.1% - 35.3% 36.2% Operating income 5.1 3.9 31% 3.6 43% 10.8 10.5 Operating income excluding restructuring charges 6.1 4.2 46% 6.3 -4% 15.1 11.2 Operating margin 8.6% 6.7% - 5.9% - 6.2% 6.6% Operating margin excluding restructuring charges 10.2% 7.2% - 10.4% - 8.7% 7.0% Net income 3.1 2.6 19% 2.1 47% 6.7 7.0 EPS diluted, SEK 0.94 0.81 16% 0.64 47% 1.98 2.25 EPS (Non-IFRS), SEK 1) 1.34 1.11 21% 1.45 -8% 3.56 3.08 Cash flow from operating activities 1.6 -1.4 - 3.1 -49% -1.3 10.1 Net cash, end of period -0.2 29.4 - 3.5 - -0.2 29.4 1) EPS, diluted, excl. amortizations and write-downs of acquired intangible assets, and restructuring. 1 Ericsson | Third Quarter Report 2015

CEO COMMENTS Reported sales increased by 3% YoY. Sales, adjusted for comparable units and currency, decreased by -9%, due to lower sales in Networks. This was partly offset by continued solid sales growth in Professional Services. Profitability improved YoY, with lower operating expenses as a significant contributor. Business Sales growth remained strong in India as well as in South East Asia and Oceania compared to the same period last year, while sales declined in North East Asia as well as in Northern Europe and Central Asia. The mobile broadband business in North America remained stable QoQ, but at a lower level compared to the same period last year. In the quarter, there was a slowdown of the 4G deployments in Mainland China. We also saw a somewhat slower pace of mobile broadband investments in markets such as Russia, Brazil and parts of the Middle East which had a weak macro development. Professional Services sales increased by 15% YoY, with double-digit growth in eight out of ten regions, driven by strong performance across the portfolio. Profitability Operating income, excluding restructuring charges, increased by 46% YoY with improvements in all segments. The main contributors to the profit improvement were lower operating expenses and a break-even result in Network Rollout. The negative effect of revaluation and realization of currency hedge contracts was lower than a year ago. Global Services operating margin increased to 9% as an effect of the improved Network Rollout profitability and a solid result in Professional Services. Segment Networks profitability remained stable in the quarter, with an operating margin of 10%, despite lower sales. Cost and efficiency program The global cost and efficiency program, with the target to achieve annual net savings of SEK 9 b. during 2017, is progressing according to plan. Since the announcement in November last year, a number of activities have been implemented globally, contributing to lower cost levels. Cash flow After a weak first quarter our cash flow from operating activities has now been positive for the last two quarters despite major payouts related to the ongoing cost and efficiency program. Cash flow year to date has been negatively impacted by increased working capital. This was driven by a business mix with a high share of coverage projects in Mainland China and emerging markets. Targeted growth areas Our strategic growth initiatives build on a combination of excelling in our core business and establishing leadership in targeted growth areas. We see continued good progress in these areas which had a sales growth of more than 10% YoY. In targeted growth area TV & Media we made two important customer announcements in North America, confirming our strong position in the fast-growing TV & Media market. In addition, Ericsson signed an agreement to acquire the Nasdaq-listed company Envivio, a global leader in software-based video encoding. There is an increased customer interest in future network architecture for 5G, virtualization, efficient video delivery and internet of things (IoT). With our ongoing strategic initiatives, we are well positioned to create value for our customers and shareholders in a transforming market. Hans Vestberg President and CEO 2 Ericsson | Third Quarter Report 2015

FINANCIAL HIGHLIGHTS Q3 Q3 YoY Q2 QoQ 9 months 9 months SEK b. 2015 2014 change 2015 change 2015 2014 Net sales 59.2 57.6 3% 60.7 -2% 173.4 160.0 Of which Networks 28.8 30.0 -4% 31.2 -8% 86.4 83.4 Of which Global Services 27.1 24.5 11% 26.4 3% 77.3 67.9 Of which Support Solutions 3.3 3.1 8% 3.1 6% 9.5 8.6 Of which Modems - 0.1 - 0.0 - 0.1 0.1 Gross income 20.1 20.3 -1% 20.1 0% 59.2 57.5 Gross margin (%) 33.9% 35.2% - 33.2% - 34.1% 36.0% Research and development expenses -8.5 -9.3 -8% -9.9 -14% -26.9 -26.6 Selling and administrative expenses -6.4 -6.0 7% -7.8 -18% -21.3 -19.0 Other operating income and expenses 0.1 -1.1 - 1.1 -92% -0.1 -1.3 Operating income 5.1 3.9 31% 3.6 43% 10.8 10.5 Operating margin 8.6% 6.7% - 5.9% - 6.2% 6.6% for Networks 10% 11% - 8% - 7% 11% for Global Services 9% 7% - 6% - 7% 6% for Support Solutions 0% -4% - -8% - -2% -5% for Modems - - - - - - - Financial net -0.6 -0.1 385% -0.5 18% -1.2 -0.5 Taxes -1.3 -1.1 19% -0.9 47% -2.9 -3.0 Net income 3.1 2.6 19% 2.1 47% 6.7 7.0 Restructuring charges -1.0 -0.3 251% -2.7 -64% -4.3 -0.7 Net sales Reported sales increased by 3% YoY. Sales, adjusted for comparable units and currency, decreased by -9% mainly due to lower business activity in Japan, Russia and Brazil. This was partly offset by a strong sales growth in India as well as in South East Asia and Oceania. The mobile broadband business in North America remained stable QoQ, but at a lower level compared to the same period last year. Professional Services sales increased YoY, driven by strong performance across the portfolio with double-digit growth in eight out of ten regions. Networks sales decreased mainly due to lower business activity in Russia, Japan and the Middle East. Sequentially, reported sales decreased by -2%. In the quarter there was a slowdown of the 4G deployments in Mainland China. There was also a somewhat slower pace of mobile broadband investments in certain markets such as Russia, Brazil and parts of the Middle East which had a weak macro development. Reported IPR revenues were stable both YoY and QoQ. The majority of the licenses contracts are in USD and the stronger USD supported the YoY comparison. Gross margin Gross margin decreased YoY due to a higher share of Global Services sales and increased restructuring charges. Excluding restructuring charges, gross margin was 34.5% (35.5%). Sequentially, gross margin increased due to lower restructuring charges. This was partly offset by a higher share of Global Services sales. Restructuring charges and cost and efficiency program The global cost and efficiency program is progressing according to plan. The target remains, to achieve annual net savings of SEK 9 b. during 2017 relative to 2014. Total restructuring charges for full-year 2015 are expected to be approximately SEK 5 b. Operating expenses Operating expenses, excluding restructuring charges, decreased to SEK 14.3 (15.2) b. partly driven by the ongoing cost and efficiency program and partly from cost adjustments following lower business volumes. Restructuring charges impacted operating expenses negatively by SEK 0.6 (0.1) b. 3 Ericsson | Third Quarter Report 2015

Quarterly sales and reported sales growth year over year Operating expenses and operating expenses, % of sales Operating income and operating margin SEK b. % SEK b. % SEK b. % 80 30 60 59.2 20 20 40 15 14.9 30 10 10 9% 40 10 25% 8 8 20 3% 0 10 20 6 5.1 6 0 -10 5 10 4 4 0 02200 Q3 Q4 Q1 Q2 Q3 2014 2015 Q3 Q4 Q1 Q2 Q3 2014 2015 Q3 Q4 Q1 Q2 Q3 2014 2015 Quarterly sales Operating expenses Operating income Reported sales growth Operating expenses of sales Operating margin Other operating income and expenses Other operating income and expenses improved YoY. The revaluation and realization effects of currency hedge contracts were SEK -0.3 b. This was more than offset by several minor positive items. The effect of currency hedge contracts is to be compared to SEK 0.6 b. in Q2 2015 and SEK -1.3 b. in Q3 2014. The main part of the currency hedge contract balance is in USD. The SEK has weakened towards the USD between June 30, 2015 (SEK/USD rate 8.24) and Sept 30, 2015 (SEK/USD rate 8.38). Operating income Operating income increased YoY due to a lower negative effect of currency hedge contracts, lower operating expenses and a break-even result in Network Rollout. This was partly offset by a decline in Network sales. Operating income increased QoQ driven by lower restructuring charges and lower operating expenses. Financial net The negative financial net increased YoY and QoQ, mainly related to effects of foreign currency revaluation. In addition, the lower cash position and lower interest rates have resulted in reduced financial income. Net income and EPS Net income and EPS diluted increased YoY following higher operating income. Net income and EPS diluted increased QoQ. EPS (Non-IFRS) were SEK 1.34 (1.11). Employees The number of employees on Sept 30, 2015 was 116,240 compared with 117,183 on June 30, 2015. In the quarter, close to 5,000 employees left the company. The decrease was partly offset by recruitments to Global Service Delivery Centers, employees joining through acquisitions and in-sourcing from new managed services contracts. Some of the headcount reduction was related to the global cost and efficiency program. The majority of the earlier announced reductions in Sweden, of approximately 1,700 employees, is expected to be completed by the end of this year. The number of Ericsson’s services professionals on Sept 30, 2015 was 65,000 (65,000 June 30, 2015). MODEMS The discontinuation of the modems business is now completed. 4 Ericsson | Third Quarter Report 2015

REGIONAL SALES Third quarter 2015 Change Global Support SEK b. Networks Services Solutions Total YoY QoQ North America 6.4 6.9 1.0 14.4 2% -2% Latin America 2.5 2.9 0.2 5.6 -5% 11% Northern Europe and Central Asia 1.4 1.0 0.1 2.5 -20% -1% Western and Central Europe 1.4 3.0 0.2 4.5 -2% -12% Mediterranean 2.2 3.2 0.2 5.5 5% -7% Middle East 2.7 2.6 0.4 5.7 -5% -12% Sub-Saharan Africa 1.2 1.3 0.1 2.7 10% 1% India 2.4 1.1 0.1 3.6 81% 19% North East Asia 4.1 2.0 0.2 6.3 -10% -9% South East Asia and Oceania 2.4 2.2 0.1 4.8 25% -3% Other 1) 2.0 0.8 0.8 3.5 4% 4% Total 28.8 27.1 3.3 59.2 3% -2% 1) Region “Other” includes licensing revenues, broadcast services, power modules, mobile broadband modules, Ericsson-LG Enterprise and other businesses. North America The mobile broadband business in North America remained stable QoQ. Operators continued to focus on cash flow optimization and consolidation, leading to lower investment levels compared to the same period last year. ICT transformation and professional services developed favorably. In the quarter, two important TV & Media agreements were announced. Latin America In the quarter the mobile broadband investment levels in Brazil were reduced somewhat driven mainly by local currency depreciation towards the USD. This was partly offset by continued mobile broadband investments in Mexico. ICT transformation and professional services business developed favorably, mainly in the OSS and BSS domain. Northern Europe and Central Asia The mobile broadband business declined in the quarter, due to continued low investment levels in Russia. This was partly offset by coverage investments in Ukraine. In the Nordics, efficiency and ICT transformation were the main drivers of the good development in Professional Services and Support Solutions. Western and Central Europe Sales in mobile broadband declined partly due to the completion of some key projects in the quarter. Operators remained focused on network quality and operational efficiency which were the main drivers of the continued strong development in Professional Services. Mediterranean Mobile broadband investments in quality and capacity contributed positively to sales. Operator focus on efficiency was the main growth driver in Professional Services. Middle East Networks sales declined as a few key mobile broadband coverage projects related to 3G were finalized. Some countries in the region are experiencing slower GDP growth and local currency depreciation towards USD creating a temporary slowdown of mobile broadband investments. Transformation projects in the OSS, BSS and TV domains were the main drivers of the strong development of Professional Services and Support Solutions sales. Sub-Saharan Africa Sales growth was driven by a continued positive development of professional services business as operators are focusing on network quality and efficiency. The mobile broadband business was stable. India The high level of mobile broadband investments, which started in the beginning of 2015, continued in the quarter with the main driver being mobile data traffic growth. The managed services business developed favorably as operators focus on network optimization and efficiency. North East Asia Lower operator investments in Japan continued. In Mainland China there was a slowdown of the 4G deployments. Given the high 4G subscriber penetration in Mainland China, operators see new business opportunities and through the acquisition of Sunrise Technologies Ericsson has strengthened its position to support customers in their transformation. South East Asia and Oceania Sales growth was primarily driven by continued mobile broadband coverage projects. Important mobile broadband agreements were announced in Indonesia in the quarter. The managed services business developed favorably as operators focus on network optimization and efficiency. Other Reported IPR revenues were stable YoY. The majority of the license agreements are in USD and the stronger USD supported the YoY comparison. Broadcast services sales continued to grow. 5 Ericsson | Third Quarter Report 2015

SEGMENT RESULTS NETWORKS Segment sales Quarterly sales and sales growth year over year Operating income and operating margin SEK b. % SEK b. % 42 20 9 15 35 15 4 10% 10 28 28.2 10 2 2.8 5 21 5 0 0 14 0 7 -4% -5 0 -10 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2014 2015 2014 2015 Networks Quarterly sales Operating income Global Services Sales growth Operating margin Support Solutions Q3 Q3 YoY Q2 QoQ 9 months 9 months SEK b. 2015 2014 change 2015 change 2015 2014 Net sales 28.8 30.0 -4% 31.2 -8% 86.4 83.4 Sales growth adj. for comparable units and currency - - -15% - -6% -11% 0% Operating income 2.8 3.2 -13% 2.4 14% 5.8 9.2 Operating income excluding restructuring charges 3.3 3.3 2% 4.3 -22% 8.4 9.5 Operating margin 10% 11% - 8% - 7% 11% Operating margin excluding restructuring charges 12% 11% - 14% - 10% 11% EBITA margin 11% 13% - 10% - 9% 13% Restructuring charges -0.6 -0.1 - -1.8 -69% -2.6 -0.3 Net sales Reported sales decreased by -4% YoY. Sales, adjusted for comparable units and currency, decreased by -15% YoY. The decline was mainly due to lower sales in the Middle East, North East Asia as well as in Northern Europe and Central Asia. Sales declined in Radio, partly offset by sales growth in Microwave and IP routing. Sales, adjusted for comparable units and currency, decreased QoQ. In the quarter, there was a slowdown of the 4G deployments in Mainland China. There was also a somewhat slower pace of mobile broadband investments in markets such as Russia, Brazil and parts of the Middle East which had a weak macro development. Sales in India contributed positively while mobile broadband business in North America remained stable QoQ, but at a lower level compared to the same period last year. Operating income and margin Operating income decreased YoY due to higher restructuring charges and lower sales. Lower operating expenses contributed positively. Operating margin was stable YoY. Sequentially, operating income and margin improved, mainly due to lower operating expenses and restructuring charges. This was partly offset by lower sales. In the quarter, the effect of currency hedge contracts was negative at SEK -0.2 (-1.0) b. In Q2 2015 the effect of currency hedge contracts was positive at SEK 0.5 b. 6 Ericsson | Third Quarter Report 2015

GLOBAL SERVICES Segment sales Quarterly sales and sales growth year over year Operating income and operating margin SEK b. % SEK b. % 40 20 3 9% 9 30 15 2 2.4 6 20 27.1 11% 10 1 3 10 5 0 0 0 0 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2014 2015 2014 2015 Networks Quarterly sales Operating income Global Services Sales growth Operating margin Support Solutions Q3 Q3 YoY Q2 QoQ 9 months 9 months SEK b. 2015 2014 change 2015 change 2015 2014 Net sales 27.1 24.5 11% 26.4 3% 77.3 67.9 Of which Professional Services 20.5 17.8 15% 20.0 3% 58.7 49.4 Of which Managed Services 8.0 7.2 11% 8.2 -2% 23.6 19.4 Of which Network Rollout 6.5 6.7 -2% 6.4 2% 18.7 18.5 Sales growth adj. for comparable units and currency - - -2% - 2% -2% -4% Operating income 2.4 1.6 47% 1.6 44% 5.7 4.1 Of which Professional Services 2.4 2.1 16% 2.4 -1% 6.9 6.0 Of which Network Rollout 0.0 -0.5 -95% -0.8 -97% -1.2 -1.9 Operating margin 9% 7% – 6% – 7% 6% for Professional Services 12% 12% – 12% – 12% 12% for Network Rollout 0% -7% – -12% – -6% -10% Operating income excluding restructuring charges 2.7 1.7 57% 2.3 17% 7.2 4.4 Operating margin excluding restructuring charges 10% 7% - 9% - 9% 6% EBITA margin 10% 8% - 7% - 8% 7% Restructuring charges -0.4 -0.1 193% -0.7 -48% -1.5 -0.2 Net sales Reported sales increased by 11% YoY. Sales, adjusted for comparable units and currency, decreased by -2% YoY. Network Rollout sales declined. The positive momentum in Professional Services continued, with double-digit growth in eight out of ten regions, driven by strong performance across the portfolio. Sales, adjusted for comparable units and currency, increased by 2% QoQ with growth in both Professional Services and Network Rollout. Operating income and margin Operating income and margin improved in Global Services YoY. Operating margin, excluding restructuring charges, was 10% (7%), driven by an improved income in Network Rollout and increased sales in Professional Services. Operating margin in Network Rollout improved YoY, both including and excluding restructuring charges. Network Rollout operating margin, excluding restructuring charges, was 0% (-6%). The work, to restore Network Rollout to a sustainable profitable business, continues. Operating margin in Professional Services was stable YoY. The effect of currency hedge contracts YoY was SEK 0.0 (-0.2) b. Global Services operating income increased QoQ driven by improved income in Network Rollout and lower restructuring charges. Professional Services margin was flat QoQ. Q3 Q2 Q1 Full year 2015 2015 2015 2014 Number of signed Managed Services contracts 18 30 27 71 Number of signed significant consulting & systems integration contracts 1) 16 16 13 56 1) In the areas of OSS and BSS, IP, Service Delivery Platforms and data center build projects. 7 Ericsson | Third Quarter Report 2015

SUPPORT SOLUTIONS Segment sales Quarterly sales and sales Operating income and growth year over year operating margin SEK b. % SEK b. % 4 40 1.0 20 3 3.3 20 0.5 10 2 8% 0 0.0 0% 0.0 0 1 -20 -0.5 -10 0 -40 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2014 2015 2014 2015 Networks Quarterly sales Operating income Global Services Sales growth Operating margin Support Solutions Q3 Q3 YoY Q2 QoQ 9 months 9 months SEK b. 2015 2014 change 2015 change 2015 2014 Net sales 3.3 3.1 8% 3.1 6% 9.5 8.6 Sales growth adj. for comparable units and currency - - -8% - 7% -10% 7% Operating income 0.0 -0.1 - -0.2 - -0.2 -0.5 Operating income excluding restructuring charges 0.0 0.0 - 0.0 - 0.1 -0.4 Operating margin 0% -4% - -8% - -2% -5% Operating margin excluding restructuring charges 1% -1% - -1% - 1% -4% EBITA margin 7% 3% - 0% - 6% 1% Restructuring charges 0.0 -0.1 -52% -0.2 -81% -0.3 -0.1 Net sales Reported sales increased by 8% YoY. Sales, adjusted for comparable units and currency, decreased by -8% YoY. Sales of OSS & BSS continued to show growth while the TV & Media business declined due to lower software licensing sales. The implementation of the TV & Media strategy showed significant progress in the quarter with two important TV & Media agreements announced in North America. An agreement was also signed, to acquire the Nasdaq-listed company Envivio, a global leader in software-based video encoding. The acquisition is expected to close in the fourth quarter, 2015, subject to customary closing conditions. Sales, adjusted for comparable units and currency, increased slightly QoQ driven by OSS & BSS business. Operating income and margin Operating income and margin improved YoY mainly driven by sales growth in OSS & BSS and lower restructuring charges. The effect of currency hedge contracts YoY was SEK 0.0 (-0.1) b. Operating income increased QoQ due to reduced restructuring charges, lower operating expenses and higher sales. 8 Ericsson | Third Quarter Report 2015

CASH FLOW SEK b. Net income reconciled to cash Changes in operating net assets Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Net change in cash and cash equivalents Cash conversion (%) Q3 2015 6.8 -5.2 1.6 -0.1 -0.3 1.0 23% Q3 2014 5.0 -6.3 -1.4 -0.7 -1.3 -1.0 -27% Q2 2015 3.4 -0.3 3.1 7.0 -10.6 -2.3 90% Cash flow from operating activities YTD has been negatively impacted by increased working capital. This was driven by a business mix with a high share of coverage projects in Mainland China and emerging markets. Cash flow from operating activities improved YoY. Sequentially, cash flow from operating activities declined. This was mainly due to increased working capital. In addition provisions decreased in the quarter as a result of payments of SEK 1.1 b related to restructuring charges. Cash flow from investing activities was negatively impacted by the construction of new ICT centers in Sweden and Canada, however at a slower pace in this quarter. In addition, payouts of SEK -1.0 b. were made mainly related to the acquisition of Sunrise Technologies in China. Higher activity in technology platform development also impacted cash flow from investing activities negatively, with higher capitalized development expenses than a year ago. A decrease in short-term investments of SEK 3.6 b. resulted in a cash flow from investing activities close to zero. Cash flow from financing activities was negatively impacted by dividends paid by subsidiaries to minority owners of SEK 0.3 b. Working capital KPIs, number of days Sales outstanding (target: <90) Inventory (target:<65) Payable (target:>60) Jan-Sep 2015 113 72 55 Jan-Jun 2015 112 74 57 Jan-Mar 2015 125 82 64 Jan-Dec 2014 105 64 56 Jan-Sep 2014 111 69 57 9 Ericsson | Third Quarter Report 2015

FINANCIAL POSITION Sep 30 Sep 30 Jun 30 SEK b. 2015 2014 2015 + Short-term investments 17.6 34.0 20.8 + Cash and cash equivalents 34.0 32.0 33.0 Gross cash 51.5 66.1 53.8 – Interest bearing liabilities and post-employment benefits 51.8 36.6 50.3 Net cash -0.2 29.4 3.5 Equity 138.0 143.4 136.7 Total assets 278.4 274.0 278.9 Capital turnover (times) 1.2 1.2 1.3 Return on capital employed (%) 8.0% 8.6% 6.9% Equity ratio (%) 49.6% 52.3% 49.0% Return on equity (%) 6.2% 6.9% 5.9% Gross cash decreased mainly due to the acquisition of Sunrise Technologies and investments in ICT centers, partly offset by positive cash flow from operating activities. Actuarial changes in pension liabilities reduced net cash with an additional SEK 1.5 b. The net cash position, excluding post-employment benefits, was SEK 25.8 b. In the quarter, Standard & Poor’s and Moody’s confirmed Ericsson’s long-term rating BBB+/Baa1, both with stable outlook. The average maturity of long-term borrowings as of Sep 30, 2015, was 5.0 years, compared to 6.0 years 12 months earlier. Debt maturity profile, Parent Company SEK b. 9 6 3 0 2015 2016 2017 2018 2019 2020 2021 2022 Swedish Export Credit Corporation MTN Bond Nordic Investment Bank European Investment Bank Notes and Bonds 10 Ericsson | Third Quarter Report 2015

PARENT COMPANY Income after financial items was SEK 10.1 (15.8) b. YTD. The decrease was mainly due to lower recognized dividends from subsidiaries than last year. Major YTD changes in the Parent Company’s financial position; decreased cash, cash equivalents and short-term investments of SEK 20.3 b. and decreased current and non-current liabilities to subsidiaries of SEK 2.3 b. At the end of the quarter, cash, cash equivalents and short-term investments amounted to SEK 34.7 (55.0) b. The Parent Company has recognized dividends from subsidiaries of SEK 0.4 b. in the quarter. In accordance with the conditions of the long-term variable compensation program (LTV) for Ericsson employees, 3.394.498 shares from treasury stock were sold or distributed to employees in the third quarter. The holding of treasury stock at September 30, 2015, was 53.212.685 Class B shares. 11 Ericsson | Third Quarter Report 2015

OTHER INFORMATION Apple litigations A past global patent license agreement between Ericsson and Apple expired in January 2015 and Apple declined to take a new license on offered FRAND terms. Ericsson negotiated a renewal agreement with Apple for more than two years. During the negotiations, the companies were not able to reach an agreement on licensing of Ericsson’s patents that enable Apple’s mobile devices to connect with the world and power many of their applications. On January 12, 2015, Apple initiated litigation with Ericsson by filing a lawsuit in the United States District Court for the Northern District of California, seeking a ruling that Apple does not infringe seven of Ericsson’s patents. Two days later, on January 14, 2015, Ericsson filed a complaint in the United States District Court for the Eastern District of Texas requesting a ruling that its proposed global licensing terms with Apple were fair and reasonable. On February 26, 2015, after Apple refused Ericsson’s offer to have a court determine fair licensing terms by which both companies would be bound, Ericsson filed two complaints with the International Trade Commission (ITC) and seven complaints in the United States District Court for the Eastern District of Texas against Apple, asserting infringement of 41 additional Ericsson patents. Ericsson subsequently amended its complaints to assert two additional patents in the US. Ericsson seeks exclusion orders in the ITC proceedings and damages and injunctions in the District Court actions. The hearing in the first ITC action is scheduled for December 2015 and the hearing in the second ITC action is scheduled for January 2016. The district court proceedings are all scheduled for trial between May and October 2016. On May 8, 2015, Ericsson further announced that it has filed patent infringement suits against Apple in Germany, the United Kingdom and the Netherlands, seeking damages and injunctions. Ericsson has asserted both standard-essential patents related to the 2G and 4G/LTE standards and other patents that are critical to features and functionality of Apple devices, such as the design of semiconductor components, user interface software, location services and applications, as well as the iOS operating system. Hearings and trials in the various cases are scheduled to begin in December 2015 and continue into 2016. Ericsson expects that the first court rulings will be issued by a German court in the first quarter of 2016. Adaptix litigations In 2013, Adaptix Inc. (“Adaptix”), a US company, filed two lawsuits against Ericsson, AT&T, AT&T Mobility and MetroPCS Communications in the US District Court for Eastern District of Texas alleging that certain Ericsson products infringe five US patents purportedly assigned to Adaptix. Adaptix seeks damages and an injunction. The trial is scheduled for February 2016. On May 20, 2014, Adaptix filed three patent infringement lawsuits against Ericsson, T-Mobile, Verizon and Sprint in the same court regarding three US patents. One of these lawsuits accuses Ericsson’s LTE products and Sprint’s use thereof of infringement, one accuses Ericsson’s LTE products and Verizon’s use thereof of infringement, and one accuses Ericsson’s LTE products and T-Mobile’s use thereof of infringement. In January 2015, Adaptix filed one more lawsuit in the same court alleging that Ericsson’s LTE products, and Sprint and Verizon’s use thereof, infringe another U.S. Patent. In addition to a complaint filed in 2013 with the Tokyo District Court, settled in December 2014, Adaptix filed another lawsuit in Japan in September 2014 alleging that Ericsson’s LTE products infringe another Japanese patent. In the lawsuits in Japan, Adaptix is only seeking damages. Wi-LAN litigations In 2012, Wi-LAN Inc., a Canadian patent licensing company, filed a complaint against Ericsson in the US District Court for the Southern District of Florida alleging that Ericsson’s LTE products infringe three of Wi-LAN’s US patents. In June 2013, Ericsson’s motion for summary judgment was granted and in August 2014, the decision was reversed by the United States Court of Appeals for the Federal Circuit. On May, 22 2015, the Florida Court granted a Motion for Summary Judgment in favor of Ericsson. This matter is currently in appeal. Ericsson announced agreement to acquire Envivio On September 10, 2015, Ericsson announced its agreement to acquire Envivio (NASDAQ:ENVI), by means of a tender offer for a price of USD 4.10 per share in cash, or approximately USD 125 million in the aggregate. Envivio is a global leader in software-based video encoding with an installed base of over 400 TV service provider and content owner customers in all markets globally. Envivio generated revenues of USD 43 million in 2014 and is headquartered in San Francisco, CA, US. Envivio was founded in 2000 and has a staff of approximately 200 employees worldwide. Certain of Envivio’s major stockholders, collectively owning approximately 34 % of Envivio’s outstanding common stock, have entered into a tender and support agreement with Ericsson committing to tender all of their Envivio shares in the tender offer and to vote in favor of the merger. The acquisition is expected to close in the fourth quarter, 2015, subject to customary closing conditions. The board of directors of Envivio has unanimously agreed to recommend that Envivio’s stockholders tender their shares to Ericsson in the tender offer. On September 21, 2015, a complaint was filed in the Delaware Court of Chancery by a stockholder plaintiff captioned Hollenkamp v. Envivio, Inc. (Envivio), et al., C.A. No. 11528-VCG (Hollenkamp). Hollenkamp is a putative class action on behalf of all of Envivio’s stockholders which challenges, and seeks to enjoin, Ericsson’s proposed acquisition of Envivio. The complaint alleges that the individual defendants (i.e., Envivio’s directors and officers) breached their duties to Envivio’s stockholders in approving the proposed acquisition, and that Ericsson - acting in its capacity as a transactional counterparty - aided and abetted the individual defendants’ breaches of fiduciary duty. 12 Ericsson | Third Quarter Report 2015

POST-CLOSING EVENTS Ericsson intends to acquire software developer Ericpol On October 15, 2015, Ericsson announced the conclusion of a preliminary share purchase agreement for the acquisition of Ericpol’s operations in Poland and Ukraine. Ericpol is a software development company within telecommunications and has been a supplier to Ericsson for over 20 years. Approximately 2,000 employees will join Ericsson. The acquisition is expected to take place during the first quarter of 2016, pending, among other things, customary regulatory approvals. 13 Ericsson | Third Quarter Report 2015

RISK FACTORS Ericsson’s operational and financial risk factors and uncertainties along with our strategies and tactics to mitigate risk exposures or limit unfavorable outcomes are described in our Annual Report 2014. Compared to the risks described in the Annual Report 2014, no material, new or changed risk factors or uncertainties have been identified in the year. Risk factors and uncertainties in focus short-term for the Parent Company and the Ericsson Group include: > Potential negative effects on operators’ willingness to invest in network development due to uncertainty in the financial markets and a weak economic business environment, or reduced consumer telecom spending, or increased pressure on us to provide financing, or delayed auctions of spectrums; > Uncertainty regarding the financial stability of suppliers, for example due to lack of financing; > Effects on gross margins and/or working capital of the business mix in the Networks segment between capacity sales and new coverage build-outs; > Effects on gross margins of the business mix in the Global Services segment including proportion of new network build-outs and share of new managed services deals with initial transition costs; > Effects of the ongoing industry consolidation among our customers as well as between our largest competitors, e.g. with postponed investments and intensified price competition as a consequence; > Changes in foreign exchange rates, in particular USD; > Political unrest or instability in certain markets; > Effects on production and sales from restrictions with respect to timely and adequate supply of materials, components and production capacity and other vital services on competitive terms; > No guarantees that specific restructuring or cost-savings initiatives will be sufficient, successful or executed in time to deliver any improvements in short-term earnings. Ericsson stringently monitors the compliance with all relevant trade regulations and trade embargos applicable to dealings with customers operating in countries where there are trade restrictions or trade restrictions are discussed. Moreover, Ericsson operates globally in accordance with Group policies and directives for business ethics and conduct. Stockholm, October 23, 2015 Telefonaktiebolaget LM Ericsson Hans Vestberg, President and CEO Org. Nr 556016-0680 Date for next report: January 27, 2016 14 Ericsson | Third Quarter Report 2015

AUDITORS’ REVIEW REPORT Introduction We have reviewed the condensed interim financial information (interim report) of Telefonaktiebolaget LM Ericsson (publ.) as of September 30, 2015, and the nine months period then ended. The board of directors and the CEO are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review. Scope of review We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company. Stockholm, October 23, 2015 PricewaterhouseCoopers AB Peter Nyllinge Authorized Public Accountant Auditor in Charge Bo Hjalmarsson Authorized Public Accountant 15 Ericsson | Third Quarter Report 2015

EDITOR’S NOTE Ericsson invites media, investors and analysts to a press conference at the Ericsson Studio, Grönlandsgången 4, Stockholm, at 09.00 (CET), October 23, 2015. An financial analyst, investor and media conference call will begin at 14.00 (CET). Live webcast of the press conference and conference call as well as supporting slides will be available at www.ericsson.com/press and www.ericsson.com/investors Video material will be published during the day on www.ericsson.com/press For further information, please contact: Helena Norrman, Senior Vice President, Marketing and Communications Phone: +46 10 719 34 72 E-mail: investor.relations@ericsson.com or media.relations@ericsson.com Telefonaktiebolaget LM Ericsson Org. number: 556016-0680 Torshamnsgatan 21 SE-164 83 Stockholm Phone: +46 10 719 00 00 www.ericsson.com Investors Peter Nyquist, Vice President, Investor Relations Phone: +46 10 714 64 49, +46 70 575 29 06 E-mail: peter.nyquist@ericsson.com Stefan Jelvin, Director, Investor Relations Phone: +46 10 714 20 39, +46 70 986 02 27 E-mail: stefan.jelvin@ericsson.com Åsa Konnbjer, Director, Investor Relations Phone: +46 10 713 39 28, +46 73 082 59 28 E-mail: asa.konnbjer@ericsson.com Rikard Tunedal, Director, Investor Relations Phone: +46 10 714 54 00, +46 761 005 400 E-mail: rikard.tunedal@ericsson.com Media Ola Rembe, Vice President, Head of External Communications Phone: +46 10 719 97 27, +46 73 024 48 73 E-mail: media.relations@ericsson.com Corporate Communications Phone: +46 10 719 69 92 E-mail: media.relations@ericsson.com 16 Ericsson | Third Quarter Report 2015

SAFE HARBOR STATEMENT All statements made or incorporated by reference in this release, other than statements or characterizations of historical facts, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by us. Forward-looking statements can often be identified by words such as “anticipates”, “expects”, “intends”, “plans”, “predicts”, “believes”, “seeks”, “estimates”, “may”, “will”, “should”, “would”, “potential”, “continue”, and variations or negatives of these words, and include, among others, statements regarding: (i) strategies, outlook and growth prospects; (ii) positioning to deliver future plans and to realize potential for future growth; (iii) liquidity and capital resources and expenditure, and our credit ratings; (iv) growth in demand for our products and services; (v) our joint venture activities; (vi) economic outlook and industry trends; (vii) developments of our markets; (viii) the impact of regulatory initiatives; (ix) research and development expenditures; (x) the strength of our competitors; (xi) future cost savings; (xii) plans to launch new products and services; (xiii) assessments of risks; (xiv) integration of acquired businesses; (xv) compliance with rules and regulations and (xvi) infringements of intellectual property rights of others. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements speak only as of the date hereof and are based upon the information available to us at this time. Such information is subject to change, and we will not necessarily inform you of such changes. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Important factors that may cause such a difference for Ericsson include, but are not limited to: (i) material adverse changes in the markets in which we operate or in global economic conditions; (ii) increased product and price competition; (iii) reductions in capital expenditure by network operators; (iv) the cost of technological innovation and increased expenditure to improve quality of service; (v) significant changes in market share for our principal products and services; (vi) foreign exchange rate or interest rate fluctuations; and (vii) the successful implementation of our business and operational initiatives. 17 Ericsson | Third Quarter Report 2015

FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION Contents Financial statements Consolidated income statement 19 Statement of comprehensive income 19 Consolidated balance sheet 20 Consolidated statement of cash flows 21 Consolidated statement of changes in equity 22 Consolidated income statement – isolated quarters 22 Consolidated statement of cash flows – isolated quarters 23 Parent Company income statement 24 Parent Company statement of comprehensive income 24 Parent Company balance sheet 25 Additional information Accounting policies 26 Net sales by segment by quarter 27 Sales growth adjusted for comparable units and currency 28 Operating income by segment by quarter 29 Operating margin by segment by quarter 29 EBITA by segment by quarter 30 EBITA margin by segment by quarter 30 Net sales by region by quarter 31 Net sales by region by quarter (cont.) 32 Top 5 countries in sales 32 Net sales by region by segment 33 Provisions 34 Information on investments 34 Reconciliation table, non-IFRS measurements 35 Net cash – end of period 35 Other information 36 Number of employees 36 Restructuring charges by function 37 Restructuring charges by segment 37 18 Ericsson | Third Quarter Report 2015

CONSOLIDATED INCOME STATEMENT Jul–Sep Jan–Sep SEK million 2015 2014 Change 2015 2014 Change Net sales 59,161 57,643 3% 173,352 159,997 8% Cost of sales –39,110 –37,362 5% –114,202 –102,456 11% Gross income 20,051 20,281 –1% 59,150 57,541 3% Gross margin (%) 33.9% 35,2% 34.1% 36,0% Research and development expenses –8,540 –9,281 –8% –26,923 –26,640 1% Selling and administrative expenses –6,393 –6,000 7% –21,289 –18,993 12% Operating expenses –14,933 –15,281 –2% –48,212 –45,633 6% Other operating income and expenses 80 –1,134 –101 –1,319 Shares in earnings of JV and associated companies –121 10 –67 –84 Operating income 5,077 3,876 31% 10,770 10,505 3% Financial income 188 429 634 1,098 Financial expenses –809 –557 –1,839 –1,634 Income after financial items 4,456 3,748 19% 9,565 9,969 –4% Taxes –1,338 –1,124 –2,870 –2,991 Net income 3,118 2,624 19% 6,695 6,978 –4% Net income attributable to: Stockholders of the Parent Company 3,080 2,646 6,493 7,345 Non–controlling interests 38 –22 202 –367 Other information Average number of shares, basic (million) 3,251 3,238 3,247 3,235 Earnings per share, basic (SEK) 1) 0.95 0.82 2.00 2.27 Earnings per share, diluted (SEK) 1) 0.94 0.81 1.98 2.25 1) Based on Net income attributable to stockholders of the Parent Company. STATEMENT OF COMPREHENSIVE INCOME Jul–Sep Jan–Sep SEK million 2015 2014 2015 2014 Net income 3,118 2,624 6,695 6,978 Other comprehensive income Items that will not be reclassified to profit or loss Remeasurements of defined benefits pension plans incl. asset ceiling –1,113 –441 –5,886 –2,637 Tax on items that will not be reclassified to profit or loss 214 96 1,518 539 Items that may be reclassified to profit or loss Cash flow hedges Gains/losses arising during the period 0 0 0 0 Reclassification adjustments for gains/losses included in profit or loss 0 0 0 0 Revaluation of other investments in shares and participations Fair value remeasurement 60 39 241 39 Changes in cumulative translation adjustments –1,246 2,656 537 5,676 Share of other comprehensive income on JV and associated companies 237 234 141 362 Tax on items that may be reclassified to profit or loss 0 0 0 0 Total other comprehensive income, net of tax –1,848 2,584 –3,449 3,979 Total comprehensive income 1,270 5,208 3,246 10,957 Total comprehensive income attributable to: Stockholders of the Parent Company 1,255 5,180 3,045 11,212 Non–controlling interest 15 28 201 –255 19 Ericsson | Third Quarter Report 2015

CONSOLIDATED BALANCE SHEET Sep 30 Jun 30 Dec 31 SEK million 2015 2015 2014 ASSETS Non–current assets Intangible assets Capitalized development expenses 4,660 4,032 3,570 Goodwill 41,524 39,872 38,330 Intellectual property rights, brands and other intangible assets 9,879 10,739 12,534 Property, plant and equipment 15,774 15,309 13,341 Financial assets Equity in JV and associated companies 1,214 1,627 2,793 Other investments in shares and participations 936 855 591 Customer finance, non–current 2,020 1,919 1,932 Other financial assets, non–current 4,428 5,010 5,900 Deferred tax assets 13,575 14,054 12,778 94,010 93,417 91,769 Current assets Inventories 32,187 32,327 28,175 Trade receivables 74,957 73,932 77,893 Customer finance, current 2,089 2,552 2,289 Other current receivables 23,588 22,919 21,273 Short–term investments 17,597 20,807 31,171 Cash and cash equivalents 33,950 32,962 40,988 184,368 185,499 201,789 Total assets 278,378 278,916 293,558 EQUITY AND LIABILITIES Equity Stockholders’ equity 137,086 135,565 144,306 Non–controlling interest in equity of subsidiaries 898 1,160 1,003 137,984 136,725 145,309 Non–current liabilities Post–employment benefits 26,011 24,530 20,385 Provisions, non–current 35 139 202 Deferred tax liabilities 2,208 3,010 3,177 Borrowings, non–current 22,900 22,551 21,864 Other non–current liabilities 1,802 1,939 1,797 52,956 52,169 47,425 Current liabilities Provisions, current 4,296 5,215 4,225 Borrowings, current 2,885 3,199 2,281 Trade payables 21,734 22,147 24,473 Other current liabilities 58,523 59,461 69,845 87,438 90,022 100,824 Total equity and liabilities 278,378 278,916 293,558 Of which interest–bearing liabilities and post–employment benefits 51,796 50,280 44,530 Of which net cash –249 3,489 27,629 Assets pledged as collateral 2,605 2,608 2,525 Contingent liabilities 768 693 737 20 Ericsson | Third Quarter Report 2015

CONSOLIDATED STATEMENT OF CASH FLOWS Jul–Sep Jan–Sep Jan–Dec SEK million 2015 2014 2015 2014 2014 Operating activities Net income 3,118 2,624 6,695 6,978 11,143 Adjustments to reconcile net income to cash Taxes 51 –388 –3,230 –1,710 –1,235 Earnings/dividends in JV and associated companies 136 –10 163 330 305 Depreciation, amortization and impairment losses 2,425 2,481 7,685 7,255 9,945 Other 1,052 267 2,018 1,220 2,185 6,782 4,974 13,331 14,073 22,343 Changes in operating net assets Inventories –226 –840 –3,862 –4,127 –2,924 Customer finance, current and non–current 375 –1,101 522 –884 –710 Trade receivables –1,421 –1,222 4,246 5,843 1,182 Trade payables –494 –1,519 –3,562 15 1,265 Provisions and post–employment benefits –302 –18 1,217 –707 –859 Other operating assets and liabilities, net –3,154 –1,624 –13,154 –4,107 –1,595 –5,222 –6,324 –14,593 –3,967 –3,641 Cash flow from operating activities 1,560 –1,350 –1,262 10,106 18,702 Investing activities Investments in property, plant and equipment –1,807 –1,415 –6,598 –3,769 –5,322 Sales of property, plant and equipment 59 139 1,209 466 522 Acquisitions/divestments of subsidiaries and other operations, net –1,028 –286 –1,255 –2,647 –4,394 Product development –982 –155 –2,119 –537 –1,523 Other investing activities 37 –1,302 –125 –1,859 –3,392 Short–term investments 3,631 2,308 13,708 2,530 6,596 Cash flow from investing activities –90 –711 4,820 –5,816 –7,513 Cash flow before financing activities 1,470 –2,061 3,558 4,290 11,189 Financing activities Dividends paid –277 –3 –11,337 –9,831 –9,846 Other financing activities –34 –1,288 1,296 –8,750 –8,379 Cash flow from financing activities –311 –1,291 –10,041 –18,581 –18,225 Effect of exchange rate changes on cash –171 2,306 –555 4,238 5,929 Net change in cash and cash equivalents 988 –1,046 –7,038 –10,053 –1,107 Cash and cash equivalents, beginning of period 32,962 33,088 40,988 42,095 42,095 Cash and cash equivalents, end of period 33,950 32,042 33,950 32,042 40,988 21 Ericsson | Third Quarter Report 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Jan–Sep Jan–Sep Jan–Dec SEK million 2015 2014 2014 Opening balance 145,309 141,623 141,623 Total comprehensive income 3,246 10,957 12,709 Sale/repurchase of own shares 126 78 106 Stock purchase plan 641 547 717 Dividends paid –11,337 –9,831 –9,846 Transactions with non–controlling interests –1 – – Closing balance 137,984 143,374 145,309 CONSOLIDATED INCOME STATEMENT – ISOLATED QUARTERS 2015 2014 Isolated quarters, SEK million Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net sales 59,161 60,671 53,520 67,986 57,643 54,849 47,505 Cost of sales –39,110 –40,536 –34,556 –43,100 –37,362 –34,910 –30,184 Gross income 20,051 20,135 18,964 24,886 20,281 19,939 17,321 Gross margin (%) 33.9% 33.2% 35.4% 36.6% 35.2% 36.4% 36.5% Research and development expenses –8,540 –9,896 –8,487 –9,668 –9,281 –9,084 –8,275 Selling and administrative expenses –6,393 –7,765 –7,131 –8,107 –6,000 –6,541 –6,452 Operating expenses –14,933 –17,661 –15,618 –17,775 –15,281 –15,625 –14,727 Other operating income and expenses 80 1,059 –1,240 –837 –1,134 –206 21 Shares in earnings of JV and associated companies –121 27 27 28 10 –109 15 Operating income 5,077 3,560 2,133 6,302 3,876 3,999 2,630 Financial income 188 –238 684 179 429 268 401 Financial expenses –809 –290 –740 –639 –557 –465 –612 Income after financial items 4,456 3,032 2,077 5,842 3,748 3,802 2,419 Taxes –1,338 –909 –623 –1,677 –1,124 –1,140 –727 Net income 3,118 2,123 1,454 4,165 2,624 2,662 1,692 Net income attributable to: Stockholders of the Parent Company 3,080 2,094 1,319 4,223 2,646 2,579 2,120 Non–controlling interests 38 29 135 –58 –22 83 –428 Other information Average number of shares, basic (million) 3,251 3,247 3,244 3,241 3,238 3,235 3,233 Earnings per share, basic (SEK) 1) 0.95 0.64 0.41 1.30 0.82 0.80 0.66 Earnings per share, diluted (SEK) 1) 0.94 0.64 0.40 1.29 0.81 0.79 0.65 1) Based on Net income attributable to stockholders of the Parent Company. 22 Ericsson | Third Quarter Report 2015

CONSOLIDATED STATEMENT OF CASH FLOWS – ISOLATED QUARTERS 2015 2014 Isolated quarters, SEK million Q3 Q2 Q1 Q4 Q3 Q2 Q1 Operating activities Net income 3,118 2,123 1,454 4,165 2,624 2,662 1,692 Adjustments to reconcile net income to cash Taxes 51 –1,360 –1,921 475 –388 26 –1,348 Earnings/dividends in JV and associated companies 136 49 –22 –25 –10 356 –16 Depreciation, amortization and impairment losses 2,425 2,579 2,681 2,690 2,481 2,414 2,360 Other 1,052 22 944 965 267 404 549 6,782 3,413 3,136 8,270 4,974 5,862 3,237 Changes in operating net assets Inventories –226 383 –4,019 1,203 –840 –1,188 –2,099 Customer finance, current and non–current 375 405 –258 174 –1,101 –341 558 Trade receivables –1,421 3,630 2,037 –4,661 –1,222 –892 7,957 Trade payables –494 –1,400 –1,668 1,250 –1,519 1,644 –110 Provisions and post–employment benefits –302 1,685 –166 –152 –18 –225 –464 Other operating assets and liabilities, net –3,154 –5,038 –4,962 2,512 –1,624 –2,806 323 –5,222 –335 –9,036 326 –6,324 –3,808 6,165 Cash flow from operating activities 1,560 3,078 –5,900 8,596 –1,350 2,054 9,402 Investing activities Investments in property, plant and equipment –1,807 –2,424 –2,367 –1,553 –1,415 –1,320 –1,034 Sales of property, plant and equipment 59 1,075 75 56 139 53 274 Acquisitions/divestments of subsidiaries and other operations, net –1,028 –169 –58 –1,747 –286 –1,512 –849 Product development –982 –843 –294 –986 –155 –185 –197 Other investing activities 37 –280 118 –1,533 –1,302 –388 –169 Short–term investments 3,631 9,678 399 4,066 2,308 7,012 –6,790 Cash flow from investing activities –90 7,037 –2,127 –1,697 –711 3,660 –8,765 Cash flow before financing activities 1,470 10,115 –8,027 6,899 –2,061 5,714 637 Financing activities Dividends paid –277 –11,035 –25 –15 –3 –9,828 – Other financing activities –34 431 899 371 –1,288 –2,393 –5,069 Cash flow from financing activities –311 –10,604 874 356 –1,291 –12,221 –5,069 Effect of exchange rate changes on cash –171 –1,860 1,476 1,691 2,306 1,499 433 Net change in cash and cash equivalents 988 –2,349 –5,677 8,946 –1,046 –5,008 –3,999 Cash and cash equivalents, beginning of period 32,962 35,311 40,988 32,042 33,088 38,096 42,095 Cash and cash equivalents, end of period 33,950 32,962 35,311 40,988 32,042 33,088 38,096 23 Ericsson | Third Quarter Report 2015

PARENT COMPANY INCOME STATEMENT Jul–Sep Jan–Sep Jan–Dec SEK million 2015 2014 2015 2014 2014 Net sales – – – – – Cost of sales – – – – – Gross income – – – – – Operating expenses –135 –232 –615 –783 –1,209 Other operating income and expenses 822 752 2,160 2,075 3,088 Operating income 687 520 1,545 1,292 1,879 Financial net 318 12,344 8,505 14,484 23,684 Income after financial items 1,005 12,864 10,050 15,776 25,563 Transfers to (–) / from untaxed reserves – – – – –1,700 Taxes –155 –237 –366 –498 –263 Net income 850 12,627 9,684 15,278 23,600 PARENT COMPANY STATEMENT OF COMPREHENSIVE INCOME Jul–Sep Jan–Sep Jan–Dec SEK million 2015 2014 2015 2014 2014 Net income 850 12,627 9,684 15,278 23,600 Revaluation of other investments in shares and participations Fair value remeasurement 60 39 241 39 46 Total other comprehensive income, net of tax 60 39 241 39 46 Total comprehensive income 910 12,666 9,925 15,317 23,646 24 Ericsson | Third Quarter Report 2015

PARENT COMPANY BALANCE SHEET Sep 30 Dec 31 SEK million 2015 2014 ASSETS Fixed assets Intangible assets 907 1,193 Tangible assets 453 470 Financial assets 99,277 97,901 100,637 99,564 Current assets Inventories 1 27 Receivables 38,821 24,819 Short–term investments 16,937 30,576 Cash and cash equivalents 17,752 24,443 73,511 79,865 Total assets 174,148 179,429 STOCKHOLDERS’ EQUITY, PROVISIONS AND LIABILITIES Equity Restricted equity 48,018 48,018 Non–restricted equity 36,904 37,871 84,922 85,889 Provisions 681 1,471 Non–current liabilities 46,606 45,512 Current liabilities 41,939 46,557 Total stockholders’ equity, provisions and liabilities 174,148 179,429 Assets pledged as collateral 605 525 Contingent liabilities 22,767 20,906 25 Ericsson | Third Quarter Report 2015

ACCOUNTING POLICIES THE GROUP This interim report is prepared in accordance with IAS 34. The term “IFRS” used in this document refers to the application of IAS and IFRS as well as interpretations of these standards as issued by IASB’s Standards Interpretation Committee (SIC) and IFRS Interpretations Committee (IFRIC). The accounting policies adopted are consistent with those of the annual report for the year ended December 31, 2014, and should be read in conjunction with that annual report. There is no significant difference between IFRS effective as per September 30, 2015 and IFRS as endorsed by the EU. Discount rate applied for pension liability calculation in Sweden The Company has in previous periods estimated the discount rate for the Swedish pension liability based on the interest rates for Swedish covered bonds. Due to the recent development of the deepness of the Swedish covered bond market and the volatility in interest rates, the Company has decided to evaluate this method of estimating the discount rate. The discount rate used for the interim report is 2.25%, which is in line with the interest rates for Swedish government bonds of September 30th, 2015. 26 Ericsson | Third Quarter Report 2015

NET SALES BY SEGMENT BY QUARTER 2015 2014 Isolated quarters, SEK million Q3 Q2 Q1 Q4 Q3 Q2 Q1 Networks 28,817 31,163 26,436 34,110 30,030 28,964 24,383 Global Services 27,055 26,392 23,901 29,777 24,467 23,059 20,356 Of which Professional Services 20,545 20,001 18,131 21,405 17,794 16,554 15,078 Of which Managed Services 7,976 8,150 7,501 7,741 7,175 6,485 5,754 Of which Network Rollout 6,510 6,391 5,770 8,372 6,673 6,505 5,278 Support Solutions 3,289 3,092 3,074 4,009 3,057 2,824 2,765 Modems – 24 109 90 89 2 1 Total 59,161 60,671 53,520 67,986 57,643 54,849 47,505 2015 2014 Sequential change, percent Q3 Q2 Q1 Q4 Q3 Q2 Q1 Networks –8% 18% –22% 14% 4% 19% –30% Global Services 3% 10% –20% 22% 6% 13% –25% Of which Professional Services 3% 10% –15% 20% 7% 10% –20% Of which Managed Services –2% 9% –3% 8% 11% 13% –12% Of which Network Rollout 2% 11% –31% 25% 3% 23% –37% Support Solutions 6% 1% –23% 31% 8% 2% –46% Modems – – – – – – – Total –2% 13% –21% 18% 5% 15% –29% 2015 2014 Year over year change, percent Q3 Q2 Q1 Q4 Q3 Q2 Q1 Networks –4% 8% 8% –2% 13% 3% –13% Global Services 11% 14% 17% 10% 2% –7% –5% Of which Professional Services 15% 21% 20% 14% 10% –1% 3% Of which Managed Services 11% 26% 30% 18% 15% –4% –2% Of which Network Rollout –2% –2% 9% 0% –14% –19% –23% Support Solutions 8% 9% 11% –21% 30% 21% 13% Modems – – – – – – – Total 3% 11% 13% 1% 9% –1% –9% 2015 2014 Year to date, SEK million Jan–Sep Jan–Jun Jan–Mar Jan–Dec Jan–Sep Jan–Jun Jan–Mar Networks 86,416 57,599 26,436 117,487 83,377 53,347 24,383 Global Services 77,348 50,293 23,901 97,659 67,882 43,415 20,356 Of which Professional Services 58,677 38,132 18,131 70,831 49,426 31,632 15,078 Of which Managed Services 23,627 15,651 7,501 27,155 19,414 12,239 5,754 Of which Network Rollout 18,671 12,161 5,770 26,828 18,456 11,783 5,278 Support Solutions 9,455 6,166 3,074 12,655 8,646 5,589 2,765 Modems 133 133 109 182 92 3 1 Total 173,352 114,191 53,520 227,983 159,997 102,354 47,505 2015 2014 Year to date, year over year change, percent Jan–Sep Jan–Jun Jan–Mar Jan–Dec Jan–Sep Jan–Jun Jan–Mar Networks 4% 8% 8% 0% 1% –5% –13% Global Services 14% 16% 17% 0% –3% –6% –5% Of which Professional Services 19% 21% 20% 7% 4% 1% 3% Of which Managed Services 22% 28% 30% 7% 3% –3% –2% Of which Network Rollout 1% 3% 9% –14% –19% –21% –23% Support Solutions 9% 10% 11% 3% 21% 17% 13% Modems – – – – – – – Total 8% 12% 13% 0% 0% –5% –9% 27 Ericsson | Third Quarter Report 2015

SALES GROWTH ADJUSTED FOR COMPARABLE UNITS AND CURRENCY 2015 2014 Sequential change, percent Q3 Q2 Q1 Q4 Q3 Q2 Q1 Networks –6% 16% –28% 7% –2% 16% –30% Global Services 2% 10% –26% 20% 5% 11% –25% Support Solutions 7% –3% –31% 25% 6% 1% –45% Modems – – – – – – – Total –2% 12% –28% 13% 2% 13% –28% Isolated quarter, year over year change, 2015 2014 percent Q3 Q2 Q1 Q4 1) Q3 Q2 Q1 Networks –15% –9% –9% –7% 7% 5% –10% Global Services –2% –2% –2% 5% –2% –8% –3% Support Solutions –8% –13% –11% –5% 10% 5% 4% Modems – – – – – – – Total –9% –6% –6% –2% 3% –1% –7% Year to date, year over year change, 2015 2014 percent Jan–Sep Jan–Jun Jan–Mar Jan–Dec 1) Jan–Sep Jan–Jun Jan–Mar Networks –11% –9% –9% –3% 0% –3% –10% Global Services –2% –2% –2% –2% –4% –5% –3% Support Solutions –10% –12% –11% –2% 7% 4% 4% Modems – – – – – – – Total –7% –6% –6% –2% –2% –4% –7% 1) Partly adjusted for the initial IPR payment from Samsung in Q4 2013. 28 Ericsson | Third Quarter Report 2015

OPERATING INCOME BY SEGMENT BY QUARTER 2015 2014 Isolated quarters, SEK million Q3 Q2 Q1 Q4 Q3 Q2 Q1 Networks 2,764 2,435 590 4,319 3,175 3,574 2,476 Global Services 2,364 1,640 1,681 1,937 1,607 1,487 1,036 Of which Professional Services 2,386 2,403 2,109 2,472 2,059 2,095 1,893 Of which Network Rollout –22 –763 –428 –535 –452 –608 –857 Support Solutions –6 –240 82 443 –108 –378 12 Modems –1 7 0 –85 –739 –456 –745 Unallocated 1) –44 –282 –220 –312 –59 –228 –149 Total 5,077 3,560 2,133 6,302 3,876 3,999 2,630 2015 2014 Year to date, SEK million Jan–Sep Jan–Jun Jan–Mar Jan–Dec Jan–Sep Jan–Jun Jan–Mar Networks 5,789 3,025 590 13,544 9,225 6,050 2,476 Global Services 5,685 3,321 1,681 6,067 4,130 2,523 1,036 Of which Professional Services 6,898 4,512 2,109 8,519 6,047 3,988 1,893 Of which Network Rollout –1,213 –1,191 –428 –2,452 –1,917 –1,465 –857 Support Solutions –164 –158 82 –31 –474 –366 12 Modems 6 7 0 –2,025 –1,940 –1,201 –745 Unallocated 1) –546 –502 –220 –748 –436 –377 –149 Total 10,770 5,693 2,133 16,807 10,505 6,629 2,630 1) “Unallocated” consists mainly of costs for corporate staff, non–operational capital gains and losses. OPERATING MARGIN BY SEGMENT BY QUARTER As percentage of net sales, isolated quarters 2015 2014 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Networks 10% 8% 2% 13% 11% 12% 10% Global Services 9% 6% 7% 7% 7% 6% 5% Of which Professional Services 12% 12% 12% 12% 12% 13% 13% Of which Network Rollout 0% –12% –7% –6% –7% –9% –16% Support Solutions 0% –8% 3% 11% –4% –13% 0% Modems – – – – – – – Total 9% 6% 4% 9% 7% 7% 6% 2015 2014 As percentage of net sales, year to date Jan–Sep Jan–Jun Jan–Mar Jan–Dec Jan–Sep Jan–Jun Jan–Mar Networks 7% 5% 2% 12% 11% 11% 10% Global Services 7% 7% 7% 6% 6% 6% 5% Of which Professional Services 12% 12% 12% 12% 12% 13% 13% Of which Network Rollout –6% –10% –7% –9% –10% –12% –16% Support Solutions –2% –3% 3% 0% –5% –7% 0% Modems – – – – – – – Total 6% 5% 4% 7% 7% 6% 6% 29 Ericsson | Third Quarter Report 2015

EBITA BY SEGMENT BY QUARTER 2015 2014 Isolated quarters, SEK million Q3 Q2 Q1 Q4 Q3 Q2 Q1 Networks 3,233 3,014 1,218 4,914 3,773 4,156 3,052 Global Services 2,604 1,918 1,952 2,259 1,857 1,731 1,257 Of which Professional Services 2,605 2,635 2,344 2,711 2,254 2,289 2,073 Of which Network Rollout –1 –717 –392 –452 –397 –558 –816 Support Solutions 226 –4 308 647 95 –196 192 Modems –1 7 0 –44 –698 –416 –699 Unallocated 1) –44 –281 –220 –312 –59 –226 –149 Total 6,018 4,654 3,258 7,464 4,968 5,049 3,653 2015 2014 Year to date, SEK million Jan–Sep Jan–Jun Jan–Mar Jan–Dec Jan–Sep Jan–Jun Jan–Mar Networks 7,465 4,232 1,218 15,895 10,981 7,208 3,052 Global Services 6,474 3,870 1,952 7,104 4,845 2,988 1,257 Of which Professional Services 7,584 4,979 2,344 9,327 6,616 4,362 2,073 Of which Network Rollout –1,110 –1,109 –392 –2,223 –1,771 –1,374 –816 Support Solutions 530 304 308 738 91 –4 192 Modems 6 7 0 –1,857 –1,813 –1,115 –699 Unallocated 1) –545 –501 –220 –746 –434 –375 –149 Total 13,930 7,912 3,258 21,134 13,670 8,702 3,653 1) “Unallocated” consists mainly of costs for corporate staff, non–operational capital gains and losses. EBITA MARGIN BY SEGMENT BY QUARTER As percentage of net sales, 2015 2014 isolated quarters Q3 Q2 Q1 Q4 Q3 Q2 Q1 Networks 11% 10% 5% 14% 13% 14% 13% Global Services 10% 7% 8% 8% 8% 8% 6% Of which Professional Services 13% 13% 13% 13% 13% 14% 14% Of which Network Rollout 0% –11% –7% –5% –6% –9% –15% Support Solutions 7% 0% 10% 16% 3% –7% 7% Modems – – – – – – – Total 10% 8% 6% 11% 9% 9% 8% As percentage of net sales, 2015 2014 year to date Jan–Sep Jan–Jun Jan–Mar Jan–Dec Jan–Sep Jan–Jun Jan–Mar Networks 9% 7% 5% 14% 13% 14% 13% Global Services 8% 8% 8% 7% 7% 7% 6% Of which Professional Services 13% 13% 13% 13% 13% 14% 14% Of which Network Rollout –6% –9% –7% –8% –10% –12% –15% Support Solutions 6% 5% 10% 6% 1% 0% 7% Modems – – – – – – – Total 8% 7% 6% 9% 9% 9% 8% 30 Ericsson | Third Quarter Report 2015

NET SALES BY REGION BY QUARTER 2015 2014 Isolated quarters, SEK million Q3 Q2 Q1 Q4 Q3 Q2 Q1 North America 14,355 14,578 12,246 13,082 14,033 15,179 12,215 Latin America 5,610 5,067 4,574 6,564 5,882 5,414 4,710 Northern Europe & Central Asia 1) 2) 2,520 2,556 2,726 4,069 3,151 2,717 2,436 Western & Central Europe 2) 4,540 5,131 4,741 6,097 4,646 4,582 4,381 Mediterranean 2) 5,470 5,887 4,982 7,513 5,218 5,487 4,785 Middle East 5,728 6,515 4,517 6,865 6,039 4,514 3,859 Sub Saharan Africa 2,691 2,653 2,158 2,603 2,447 1,886 1,813 India 3,629 3,049 3,531 2,362 2,000 1,645 1,695 North East Asia 6,348 6,943 6,030 9,225 7,033 6,406 4,908 South East Asia & Oceania 4,750 4,897 4,259 4,956 3,794 3,662 3,446 Other 1) 2) 3,520 3,395 3,756 4,650 3,400 3,357 3,257 Total 59,161 60,671 53,520 67,986 57,643 54,849 47,505 1) Of which in Sweden 1,135 598 1,091 1,047 1,090 1,008 999 2) Of which in EU 10,584 11,453 10,904 14,325 10,736 10,320 9,720 2015 2014 Sequential change, percent Q3 Q2 Q1 Q4 Q3 Q2 Q1 North America –2% 19% –6% –7% –8% 24% –11% Latin America 11% 11% –30% 12% 9% 15% –30% Northern Europe & Central Asia 1) 2) –1% –6% –33% 29% 16% 12% –34% Western & Central Europe 2) –12% 8% –22% 31% 1% 5% –16% Mediterranean 2) –7% 18% –34% 44% –5% 15% –32% Middle East –12% 44% –34% 14% 34% 17% –35% Sub Saharan Africa 1% 23% –17% 6% 30% 4% –30% India 19% –14% 49% 18% 22% –3% –14% North East Asia –9% 15% –35% 31% 10% 31% –43% South East Asia & Oceania –3% 15% –14% 31% 4% 6% –20% Other 1) 2) 4% –10% –19% 37% 1% 3% –55% Total –2% 13% –21% 18% 5% 15% –29% 1) Of which in Sweden 90% –45% 4% –4% 8% 1% –25% 2) Of which in EU –8% 5% –24% 33% 4% 6% –24% 2015 2014 Year–over–year change, percent Q3 Q2 Q1 Q4 Q3 Q2 Q1 North America 2% –4% 0% –5% –3% –1% –23% Latin America –5% –6% –3% –3% 11% –3% 8% Northern Europe & Central Asia 1) 2) –20% –6% 12% 11% 7% 0% 7% Western & Central Europe 2) –2% 12% 8% 17% 6% 1% 1% Mediterranean 2) 5% 7% 4% 6% –8% –11% –9% Middle East –5% 44% 17% 16% 38% 13% 22% Sub Saharan Africa 10% 41% 19% 1% –9% –29% –15% India 81% 85% 108% 20% 56% 29% 6% North East Asia –10% 8% 23% 7% 16% –4% –19% South East Asia & Oceania 25% 34% 24% 16% 5% –3% –17% Other 1) 2) 4% 1% 15% –35% 55% 23% 12% Total 3% 11% 13% 1% 9% –1% –9% 1) Of which in Sweden 4% –41% 9% –21% 37% –21% –2% 2) Of which in EU –1% 11% 12% 12% 6% –5% –1% 31 Ericsson | Third Quarter Report 2015

NET SALES BY REGION BY QUARTER, CONT. 2015 2014 Year to date, SEK million Jan–Sep Jan–Jun Jan–Mar Jan–Dec Jan–Sep Jan–Jun Jan–Mar North America 41,179 26,824 12,246 54,509 41,427 27,394 12,215 Latin America 15,251 9,641 4,574 22,570 16,006 10,124 4,710 Northern Europe & Central Asia 1) 2) 7,802 5,282 2,726 12,373 8,304 5,153 2,436 Western & Central Europe 2) 14,412 9,872 4,741 19,706 13,609 8,963 4,381 Mediterranean 2) 16,339 10,869 4,982 23,003 15,490 10,272 4,785 Middle East 16,760 11,032 4,517 21,277 14,412 8,373 3,859 Sub Saharan Africa 7,502 4,811 2,158 8,749 6,146 3,699 1,813 India 10,209 6,580 3,531 7,702 5,340 3,340 1,695 North East Asia 19,321 12,973 6,030 27,572 18,347 11,314 4,908 South East Asia & Oceania 13,906 9,156 4,259 15,858 10,902 7,108 3,446 Other 1) 2) 10,671 7,151 3,756 14,664 10,014 6,614 3,257 Total 173,352 114,191 53,520 227,983 159,997 102,354 47,505 1) Of which in Sweden 2,824 1,689 1,091 4,144 3,097 2,007 999 2) Of which in EU 32,941 22,357 10,904 45,101 30,776 20,040 9,720 Year to date, year–over–year change, 2015 2014 percent Jan–Sep Jan–Jun Jan–Mar Jan–Dec Jan–Sep Jan–Jun Jan–Mar North America –1% –2% 0% –8% –9% –12% –23% Latin America –5% –5% –3% 3% 5% 2% 8% Northern Europe & Central Asia 1) 2) –6% 3% 12% 6% 5% 3% 7% Western & Central Europe 2) 6% 10% 8% 7% 3% 1% 1% Mediterranean 2) 5% 6% 4% –5% –9% –10% –9% Middle East 16% 32% 17% 22% 25% 17% 22% Sub Saharan Africa 22% 30% 19% –13% –18% –23% –15% India 91% 97% 108% 25% 28% 16% 6% North East Asia 5% 15% 23% 1% –2% –11% –19% South East Asia & Oceania 28% 29% 24% 0% –5% –10% –17% Other 1) 2) 7% 8% 15% –2% 28% 18% 12% Total 8% 12% 13% 0% 0% –5% –9% 1) Of which in Sweden –9% –16% 9% –6% 0% –13% –2% 2) Of which in EU 7% 12% 12% 4% 0% –3% –1% TOP 5 COUNTRIES IN SALES Q3 Jan–Sep Country 2015 2014 2015 2014 United States 24% 24% 24% 26% China 7% 6% 8% 6% India 6% 4% 6% 3% United Kingdom 3% 3% 3% 3% Italy 3% 3% 3% 3% 32 Ericsson | Third Quarter Report 2015

NET SALES BY REGION BY SEGMENT Q3 2015 Jan–Sep 2015 SEK milion Networks Global Services Support Solutions Modems Total Networks Global Services Support Solutions Modems Total North America 6,427 6,943 985 – 14,355 18,242 20,310 2,627 – 41,179 Latin America 2,510 2,910 190 – 5,610 6,906 7,756 589 – 15,251 Northern Europe & Central Asia 1,419 1,011 90 – 2,520 4,777 2,794 231 – 7,802 Western & Central Europe 1,377 2,978 185 – 4,540 4,917 8,997 498 – 14,412 Mediterranean 2,159 3,153 158 – 5,470 6,477 9,365 497 – 16,339 Middle East 2,683 2,649 396 – 5,728 9,127 6,731 902 – 16,760 Sub Saharan Africa 1,219 1,344 128 – 2,691 3,217 3,764 521 – 7,502 India 2,434 1,083 112 – 3,629 6,365 3,250 594 – 10,209 North East Asia 4,142 2,013 193 – 6,348 12,899 5,975 447 – 19,321 South East Asia & Oceania 2,428 2,221 101 – 4,750 7,361 6,263 282 – 13,906 Other 2,019 750 751 – 3,520 6,128 2,143 2,267 133 10,671 Total 28,817 27,055 3,289 – 59,161 86,416 77,348 9,455 133 173,352 Share of Total 49% 46% 5% – 100% 50% 45% 5% – 100% Q3 2015 Sequential change, percent Networks Global Services Support Solutions Modems Total North America –4% –2% 16% – –2% Latin America 11% 11% 4% – 11% Northern Europe & Central Asia –8% 7% 34% – –1% Western & Central Europe –28% –3% 27% – –12% Mediterranean –10% –4% –18% – –7% Middle East –34% 23% 23% – –12% Sub Saharan Africa –2% 7% –18% – 1% India 33% 2% –29% – 19% North East Asia –14% 3% –1% – –9% South East Asia & Oceania –4% –3% 0% – –3% Other 3% 11% 3% – 4% Total –8% 3% 6% – –2% Q3 2015 Year over year change, percent Networks Global Services Support Solutions Modems Total North America –6% 8% 31% – 2% Latin America –7% 2% –43% – –5% Northern Europe & Central Asia –34% 8% 27% – –20% Western & Central Europe –22% 9% 21% – –2% Mediterranean 3% 7% –16% – 5% Middle East –28% 31% 29% – –5% Sub Saharan Africa –1% 19% 52% – 10% India 120% 46% –26% – 81% North East Asia –7% –12% –30% – –10% South East Asia & Oceania 19% 32% 46% – 25% Other 4% 9% 11% – 4% Total –4% 11% 8% – 3% Jan–Sep 2015 Year over year change, percent Networks Global Services Support Solutions Modems Total North America –13% 14% 6% – –1% Latin America –11% 3% –19% – –5% Northern Europe & Central Asia –9% –2% 29% – –6% Western & Central Europe –9% 16% 13% – 6% Mediterranean –1% 11% –10% – 5% Middle East 13% 19% 32% – 16% Sub Saharan Africa 14% 29% 26% – 22% India 121% 51% 93% – 91% North East Asia 12% –6% –6% – 5% South East Asia & Oceania 29% 28% –1% – 28% Other –3% 43% 9% – 7% Total 4% 14% 9% – 8% 33 Ericsson | Third Quarter Report 2015

PROVISIONS 2015 2014 Isolated quarters, SEK million Q3 Q2 Q1 Q4 Q3 Q2 Q1 Opening balance 5,354 4,056 4,427 4,567 4,579 4,928 5,362 Additions 695 2,777 915 996 675 430 625 Utilization/Cash out –1,545 –1,217 –1,204 –794 –648 –642 –977 Of which restructuring –1,103 –472 –437 –213 –231 –246 –512 Reversal of excess amounts –168 –161 –236 –420 –132 –298 –88 Reclassification, translation difference and other –5 –101 154 78 93 161 6 Closing balance 4,331 5,354 4,056 4,427 4,567 4,579 4,928 2015 2014 Year to date, SEK million Jan–Sep Jan–Jun Jan–Mar Jan–Dec Jan–Sep Jan–Jun Jan–Mar Opening balance 4,427 4,427 4,427 5,362 5,362 5,362 5,362 Additions 4,387 3,692 915 2,726 1,730 1,055 625 Utilization/Cash out –3,966 –2,421 –1,204 –3,061 –2,267 –1,619 –977 Of which restructuring –2,012 –909 –437 –1,202 –989 –758 –512 Reversal of excess amounts –565 –397 –236 –938 –518 –386 –88 Reclassification, translation difference and other 48 53 154 338 260 167 6 Closing balance 4,331 5,354 4,056 4,427 4,567 4,579 4,928 INFORMATION ON INVESTMENTS Investments in assets subject to depreciation, amortization, impairment and write-downs 2015 2014 Isolated quarters, SEK million Q3 Q2 Q1 Q4 Q3 Q2 Q1 Additions Property, plant and equipment 1,807 2,424 2,367 1,553 1,415 1,320 1,034 Capitalized development expenses 982 843 294 986 155 185 197 IPR, brands and other intangible assets 10 26 11 1,014 935 621 77 Total 2,799 3,293 2,672 3,553 2,505 2,126 1,308 Depreciation, amortization and impairment losses Property, plant and equipment 1,129 1,152 1,214 1,187 1,078 1,048 1,004 Capitalized development expenses 354 333 342 342 311 315 333 IPR, brands and other intangible assets, etc. 942 1,094 1,125 1,161 1,092 1,051 1,023 Total 2,425 2,579 2,681 2,690 2,481 2,414 2,360 34 Ericsson | Third Quarter Report 2015

RECONCILIATION TABLE, NON-IFRS MEASUREMENTS – CASH CONVERSION 2015 2014 Isolated quarters, SEK million Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net income 3,118 2,123 1,454 4,165 2,624 2,662 1,692 Net income reconciled to cash 6,782 3,413 3,136 8,270 4,974 5,862 3,237 Cash flow from operating activities 1,560 3,078 –5,900 8,596 –1,350 2,054 9,402 Cash conversion 23.0% 90.2% –188.1% 103.9% –27.1% 35.0% 290.5% NET CASH – END OF PERIOD Sep 30 Jun 30 Mar 31 Dec 31 SEK million 2015 2015 2015 2014 Cash and cash equivalents 33,950 32,962 35,311 40,988 + Short term investments 17,597 20,807 30,776 31,171 – Borrowings, non–current 22,900 22,551 23,496 21,864 – Borrowings, current 2,885 3,199 2,847 2,281 – Post employment benefits 26,011 24,530 24,163 20,385 Net cash, end of period –249 3,489 15,581 27,629 35 Ericsson | Third Quarter Report 2015

OTHER INFORMATION Jul–Sep Jan–Sep Jan–Dec SEK million 2015 2014 2015 2014 2014 Number of shares and earnings per share Number of shares, end of period (million) 3,305 3,305 3,305 3,305 3,305 Of which class A–shares (million) 262 262 262 262 262 Of which class B–shares (million) 3,043 3,043 3,043 3,043 3,043 Number of treasury shares, end of period (million) 53 66 53 66 63 Number of shares outstanding, basic, end of period (million) 3,252 3,239 3,252 3,239 3,242 Numbers of shares outstanding, diluted, end of period (million) 3,284 3,271 3,284 3,271 3,275 Average number of treasury shares (million) 54 67 58 70 68 Average number of shares outstanding, basic (million) 3,251 3,238 3,247 3,235 3,237 Average number of shares outstanding, diluted (million) 1) 3,283 3,270 3,280 3,268 3,270 Earnings per share, basic (SEK) 0.95 0.82 2.00 2.27 3.57 Earnings per share, diluted (SEK) 1) 0.94 0.81 1.98 2.25 3.54 Earnings per share (Non–IFRS), diluted (SEK) 2) 1.13 1.05 2.64 2.94 4.49 Earnings per share (Non–IFRS, excluding restructuring), diluted (SEK) 2) 1.34 1.11 3.56 3.08 4.80 Ratios Days sales outstanding – – 113 111 105 Inventory turnover days 75 68 72 69 64 Payable days 51 55 55 57 56 Equity ratio (%) – – 49.6% 52.3% 49.5% Return on equity (%) 9.0% 7.6% 6.2% 6.9% 8.1% Return on capital employed (%) 11.2% 9.7% 8.0% 8.6% 9.8% Capital turnover (times) 1.3 1.3 1.2 1.2 1.2 Cash conversion % 23.0% –27.1% –9.5% 71.8% 83.7% Exchange rates used in the consolidation 3) SEK/EUR– closing rate – – 9.40 9.15 9.47 SEK/USD– closing rate – – 8.38 7.27 7.79 Other Regional inventory, end of period 18,413 17,094 18,413 17,094 17,142 Export sales from Sweden 26,921 26,871 82,885 79,106 113,734 1) Potential ordinary shares are not considered when their conversion to ordinary shares would increase earnings per share. 2) Excluding amortizations and write–downs of acquired intangibles. 3) Translation method changed from 2015. Monthly rates used to translate transactions are available on www.ericsson.com/the company/investors NUMBER OF EMPLOYEES 2015 2014 End of period Sep 30 Jun 30 Mar 31 Dec 31 Sep 30 Jun 30 Mar 31 North America 14,669 14,975 15,156 15,516 15,554 15,306 14,902 Latin America 10,754 10,823 10,970 11,066 10,901 11,179 9,731 Northern Europe & Central Asia 1) 20,953 21,441 21,556 21,633 21,691 21,476 21,484 Western & Central Europe 12,042 12,400 12,575 12,617 12,606 12,624 11,455 Mediterranean 12,748 12,925 13,363 13,387 13,306 12,475 12,253 Middle East 3,634 3,717 3,813 3,858 3,831 3,736 3,749 Sub Saharan Africa 2,306 2,389 2,442 2,406 2,288 2,284 2,094 India 21,343 21,353 21,215 19,971 19,413 18,495 17,991 North East Asia 13,782 13,104 13,488 13,464 13,653 13,448 13,490 South East Asia & Oceania 4,009 4,056 4,128 4,137 4,265 4,359 4,234 Total 116,240 117,183 118,706 118,055 117,508 115,382 111,383 1) Of which in Sweden 17,242 17,560 17,569 17,580 17,655 17,497 17,545 36 Ericsson | Third Quarter Report 2015

RESTRUCTURING CHARGES BY FUNCTION 2015 2014 Isolated quarters, SEK million Q3 Q2 Q1 Q4 Q3 Q2 Q1 Cost of sales –351 –1,157 –484 –663 –168 –116 –82 Research and development expenses –547 –1,118 –51 –113 –92 –80 –19 Selling and administrative expenses –80 –469 –79 –28 –19 –47 –29 Total –978 –2,744 –614 –804 –279 –243 –130 2015 2014 Year to date, SEK million Jan–Sep Jan–Jun Jan–Mar Jan–Dec Jan–Sep Jan–Jun Jan–Mar Cost of sales –1,992 –1,641 –484 –1,029 –366 –198 –82 Research and development expenses –1,716 –1,169 –51 –304 –191 –99 –19 Selling and administrative expenses –628 –548 –79 –123 –95 –76 –29 Total –4,336 –3,358 –614 –1,456 –652 –373 –130 RESTRUCTURING CHARGES BY SEGMENT 2015 2014 Isolated quarters, SEK million Q3 Q2 Q1 Q4 Q3 Q2 Q1 Networks –565 –1,842 –173 –142 –80 –128 –93 Global Services –358 –691 –419 –600 –122 –81 –32 Of which Professional Services –316 –175 –140 –435 –85 –63 –25 Of which Network Rollout –42 –516 –279 –165 –37 –18 –7 Support Solutions –37 –194 –19 –30 –77 –34 –5 Modems –1 –12 –3 –32 – – – Unallocated –17 –5 – – – – – Total –978 –2,744 –614 –804 –279 –243 –130 2015 2014 Year to date, SEK million Jan–Sep Jan–Jun Jan–Mar Jan–Dec Jan–Sep Jan–Jun Jan–Mar Networks –2,580 –2,015 –173 –443 –301 –221 –93 Global Services –1,468 –1,110 –419 –835 –235 –113 –32 Of which Professional Services –631 –315 –140 –608 –173 –88 –25 Of which Network Rollout –837 –795 –279 –227 –62 –25 –7 Support Solutions –250 –213 –19 –146 –116 –39 –5 Modems –16 –15 –3 –32 – – – Unallocated –22 –5 – – – – – Total –4,336 –3,358 –614 –1,456 –652 –373 –130 37 Ericsson | Third Quarter Report 2015