Gary Pinkham, Vice President, Investor Relations Carl-Henric Svanberg, President, Chief Executive Officer, Director Karl-Henrik Sundström, Chief Financial Officer, Executive Vice President, Head of Group Function Finance

Edward Snyder, Charter Equity Research Hasnain Malik, Citigroup Tim Luke, Lehman Brothers Tim Long, Bank of America Alexander Peterc, Exane BNP Paribas Jeffrey Schlesinger, UBS Warburg Kulbinder Garcha, Credit Suisse First Boston Sandeep Malhotra, Merrill Lynch Paul Sagawa, Sanford Bernstein Richard Kramer, Arete Research Tim Boddy, Goldman Sachs Mark Sue, RBC Capital Markets

Operator instructions.: Gary Pinkham, Vice President, Investor Relations: Thank you, operator, and hello everyone and welcome to our conference call. With me here in Stockholm is Carl-Henric Svanberg and Karl-Henrik Sundström, our CEO and Chief Financial Officer. We will be making forward-looking statements today, and these statements as you know are based on current expectations and certain planning assumptions. The actual results may be different for a number of reasons, and these risk factors and uncertainties associated with these planning assumptions are described in our annual report and I encourage you to read that so you have a better understanding. Also, before we get started I would like to advise you that the table on page 19 in the report that shows the related party transactions with Sony Ericsson has incorrect information in the table. The accounting was correct, it’s just that when the table was populated someone transposed the numbers. The press release will be issued shortly that will provide the corrected information. I would stress again that the information was incorrect but the accounting was correct so there’s no effect on our reported numbers. With that out of the way, I would like to hand over to our CEO for comments about our performance and plans going forward. Carl-Henric Svanberg, President, Chief Executive Officer, Director: Hello everyone. Let me start with a couple of comments on the industry. And I must say, it’s a very exciting time that we’re going through. We have the evolution to mobile broadband, the high-speed networks that really bring mobile telephony to a new level, when we can get mobile offices, or music downloads or mobile TV or whatever we’re getting in to the performance or even better than we used to in fixed broadband. There is a consolidation continuing along the operators, where they get bigger. A lot of that is achieved for economies of scale, but it’s also a preparation for convergence and triple play among some of the operators. All that consideration is focusing on scale, but it’s also a drive to focus on total cost of ownership, where CAPEX from our side is not the answer to everything, but actually, what does your equipment do in creating complexity and in operational expenses and so on. This is of course a major focus for all these acquired and merged companies, but it’s equally important to those that are standing on the side to make sure that they stay competitive. We have continued subscriber growth that keeps exceeding expectation and we saw last year 460 million subscriptions, we will probably see even more this year and we expect the 3 billion mark to be passed already in 2007 in reported subscriptions. That of course is fascinating, it’s only a few years ago that they thought that 2 billion was major saturation level. Now we know that 3 billion will pass them and continued growth will come. All of that is not primarily I would say because we can’t estimate the market, it’s more that as we go and solutions gets more cost-efficient, whether it’s the handsets or networks or operational models, that is all making the operational costs and the services much more affordable and therefore can penetrate people into the market place. Anyway, it gives a lot of opportunities. If we then look at our position, on the next slide there, which we call extended leadership in the first quarter. We have demonstrated and are daily demonstrating high capabilities and high speed networks, HSPA. We are rolling it out, as I’m sure you are aware, in the US, in Canada and in Australia and Japan, and in a number of markets in Europe as well. In fact, right now, we are involved in launching some 30 networks and that will be the form in which we know (inaudible) in the not too long future. We also have a lead that we are expanding in the area of softswitch, where we have 85 customers right now, networks where our softswitch is working. Here we have some quite exciting opportunities for the operators with switches with considerably lower up-front investment, but they are more software-based with continuous upgrade opportunities for more features and capabilities going forward. We have also – in the area of services, we are expanding our position. This is where we are, even if we exclude the Marconi acquisition we are up 58%. We are simply the biggest force in the industry. We have 21,000 employees in 140 countries and it is an area where we can offer more support for more complex networks, but also more cost-efficient solutions. I would say that our fundamental position, where some global presence and our clear technology leadership and also our work for operational excellence, that are giving us growth opportunities in many areas. If we turn to talk a little bit more, on the next slide, on professional services. This is then excluding network rollout. In this field our sales are SEK 7.2 billion, representing a 48% YoverY growth, also that excluding Marconi. Of course, that is a oretty exciting growth and it mirrors the opportunities that are there. We are growing as you all know in managed services, although of course we also have support services and system integration and advice and consulting and so on. In managed services, growth accelerates. You all know about the large contracts we’ve taken. Today we have 30 managed operations where we run networks for operators with a total of 60 million subscribers. That is a pretty testing number when you think about it. I think Cingular and Verizon have about 50 million each in the US, so this is a big number. We have also the hosting services, 50 contracts where we provide the infrastructure and the software that an operator needs to start to grow enough for his content. We can also, for the operator, negotiate the content when he so prefers. That means he can get his content up and running very, very quickly and we will charge him (as he evolves?). We had some interesting recent wins, Vodafone Netherlands is an exciting one because that’s the first incumbent network. We have 3 in Hong Kong, we have also SunCom in the US, which is a Napster-related company, and then finally another interesting one is Acea in Italy. Acea is a power and electricity trading company and they have a division for metering and renewed electric metering while we are running the operations in that particular division. That is just one exciting opportunity that is arising and there are some pretty firm discussions in the EU to make it compulsory to provide for (inaudible meeting and entire yield?). Also, we mustn’t forget, the biggest part of the services, which is just general maintenance and support. We are supporting some 700 million subscribers 24x7 and that’s a very important part of our services business. What we shouldn’t forget when it comes to managed services is that not only are those opportunities interesting by themselves, but when you get in and establish yourself as the operator of the network, it also brings the rest of the services business along, such as support or system integration or hosting, or advice. Let me then spend a few minutes on the regional update. Europe is the region where we have most of the operator consolidation. That holds (inaudible) back the activities because that tends to always put investments and activities a little hold, when larger activities get in focus. It is also a region where we have the shortest falling tariffs and we talked a lot about it. We all understand that that drives traffic and that drive needs further investment in capacity, and especially in Europe, where it’s obvious that operators want that increase to happen, the 3G networks and not the 2G, so they need to build those out first before they move subscribers over to the 3G networks. That would happen, we don’t expect too much of it this year but the future looks quite good for Europe from our point of view. The growth is so far primarily driven by services and added Marconi sales. We will see, most of the wide ranging main networks will be upgraded very soon. If we look at the CEEMEA region, it’s actually right now our largest infrastructure region, 21% up is very much what we saw also last year and the outlook looks gret. We have a number of network rollouts that go on and there are phone subscribers, that also continues. It is not only 2G networks, it’s also 3G accelerating and right now we have some 25 operators in 14 countries that are preparing to launch or have launched 3G networks. Also here we’re starting to see regional consolidation, all from players in Russia through Middle East and also some African players, so we have some consolidation here also. We will then go to Asia-Pacific. In this region we expected to pick up during the year and it’s done more than that. We are 44% up. Again phone subscribers are also – and this is as I think everybody’s aware, this is the region that will provide the largest numbers of new subscribers over the next four or five years. Here we have HSPA rollout in both Australia and Japan, for Telstra and EMobile. It’s a combination of 2G growth and 3G growth and HSPA growth. All of this, despite the fact that the Chinese 3G decision is still on hold. There I guess one should say that the fact that the 3G decision is on hold means that sooner or later either we get the decision sooner or we will see upgrades in 2G as well. But what is happening in the meantime with the big subscriber growth that is there, we have today close to 400 million subscribers who are already onto the GSM standard and will have to migrate into wideband (inaudible), whichever license decision will be taken. A couple of words then on Latin America, and this is a region where we’ve seen such phenomenal growth over the last couple of years. I guess operators are catching their breath right now and focusing on performance and trimming the networks. If you’ve been there lately you’ll probably have round that the quality is still not perfect, it’s still thin coverage and more investment needs to be made. Nevertheless it’s slower this year. This year, for example, with its 92 million subscribers it’s the fifth now, in the world, and actually last year we had 25 million new subscribers it even outpaced India, that was a couple of million less. Planning for 3G has started, we expect licenses to be awarded and maybe first decisions this year. Then when we look at the United States, this is the strongest growth region in percentage-wise for us. Of course, because of a lot of activities around Cingular, there are many opportunities also going forward there. There are prospective options now in the summer where a number of the operators are eager to get additional spectrum so they also can launch 3G and mobile broadband networks. This is also where - I’m sure nobody has missed the big consolidation in the US market where SBC primarily now is buying BellSouth and getting their arms around Cingular and also AT&T. Then on the other side we have Verizon Wireless and MCI. A lot of consolidation, primarily I would say triggered for building a position for mobile forward triple play, but also for mobile triple play. We will now have a short update on Marconi. The acquisition is very well received by our customers and the business development in many aspects is better than expected. We had sales of SEK 2.9 billion in the quarter and a number of early wins here. The integration is running well. We are a little bit more cautious now that we have enough with what we want to achieve, because all those savings are identified and in the pipeline and will happen, and we have a very clear plan for how that’s going to happen over 24 months, but we are a little bit cautious of not pushing too quickly on moving the supply chain and so on, because of the stronger orderings now. We have so far no significant savings, a lot of activities and we will see accelerating activities in Q2. We will start to see effects in the Autumn on the bottom line here. One aspect that is important to remember here is that, had this been the acquisition of a company we would have produced goodwill here from the overvalues that would not have been depreciated, because this is an asset wheel, we get the opportunity to amortize intangible assets which we do over 10 years, we use that, it becomes tax deductible and therefore it’s EPS enhancing. That comes in here with SEK 0.4 billion per quarter, in case some of you in fact had missed that effect. Then just a couple of comments on the financial side. We had sales of SEK 39.2 billion, which is 24% up YoverY. Also, if we exclude Marconi, we are 15% up. Mobile networks are 14% up and professional services are up some 60%. If we then look at the gross margin, when we compare the 43.3% with last year’s 48.5%, we should just remember what we pointed out quite clearly then in Q1 2005 that we had an exceptional effect from strong software sales which boosted the margins with a couple of percent. More importantly, maybe, to look at where we are sequentially, where we are about a percent down and that is the effect of the strong service growth and the Marconi sales, which both operate with lower margins, lower gross margins. Having said that, we feel and we have stated that today, that in old Ericsson where we were about 20% in operating margins, we are probably around a percent or so lower than last year which is an effect of the competitive environment, not so much of the price erosion itself. That continues much in line with what we’ve seen historically. But compared to a couple of years ago, there is a large number of big business opportunities where everybody wants to be part of it and is competitive. Which paves the way for many years of good business. If we then look at operating income, we are at $7 billion before the amortization of the Marconi intangibles. Looking at EPS, we are basically flat with last year, but again of course if we exclude the amortization of Marconi intangibles we are about 6% up to SEK 0.31. Cash flow is at SEK -6.1 of which SEK 7.6 is the Marconi acquisition. The cash flow is about 1.5 and Karl will come back and talk more about that in a couple of seconds here. Net cash is at SEK 33.7 billion, that is before the SEK 7.3 billion dividend that actually was effected and paid yesterday. Just a couple of words on Sony Ericsson which is a clear positive here in Q1. Sales of EUR 2 billion, where units are up 41% and sales is up 55%. So in fact, we have an increase in average sales price which is part of what is bringing the income to EUR 151 million, which is more than double from where we were a year ago. All in all, I must say that it’s an impressive product portfolio that we are developing in Sony Ericsson, and it’s really paving the way for a lot of growth here. We are also aware that it appears we’ve also had a good quarter, but clearly Sony Ericsson is clearly strengthening their position. We mustn’t forget here, when it comes to Sony Ericsson, that even if they are at 7-7.5% world market share, they are not so much in the lower end of the market. The share of the market in value is more 12%. Their position is good. The market outlook is unchanged. We expect the global mobile systems market to show moderate growth, which for us is some 6-9%, or 5-10% somewhere. The addressable market for professional services is expected to show good growth and we have estimated it to be around 10% for a number of years, which of course then in addition has room for managed services. If I were just to summarize the whole situation, with our strong position, with our global presence and technology leadership and operational expense, we have, after these years of restructuring and building its own platform, we have an opportunity to invest in and expand our growth. Firstly, mobile systems, we are today a preferred partner, we get a lot of opportunities to come in and take on lender(?) roles also with operators we haven’t had before. Such opportunities always include some sort of cost and so on that makes the first year maybe not that profitable. Then we’re back into continued deliveries for many years. We have also in next generation converged networks where we are accelerating our research and development and we are so far, very successful when it comes to the mobile softswitch position and fixed softswitch position. And we have the broadband and transmission networks where Marconi is now in and paving the way, and this is especially on the transmission side. That is why we have a lot of the bottlenecks in the world’s networks. But all this broadband capability is being provided for customers. Then we have the professional services area, where we can bring in large contracts as we do and again work to create a strong platform to grow from, so I would say that of course we are determined to continue to deliver best in class margins and we are doing so, but it is also interesting for us to accelerate the growth (when such over 200 inaudible?). With that, I would leave a word to Karl-Henrik Sundström. Karl-Henrik Sundström, Chief Financial Officer, Executive Vice President, Head of Group Function Finance: Good afternoon, or good morning, ladies and gentlemen. I would like to start with the first slide, the financial summary. I would like to highlight a couple of things here. First of all, we’ve had growth of 24%, which is 15% excluding the acquired Marconi operation. Coming in with a gross margin that is down sequentially of 0.9%. Then, as you can see in the slide here, I have an adjusted operating income which is excluding amortization of the intangible assets that were acquired in the Marconi deal. This brings it up to SEK 7 billion for Q1, or 18%, which is an increase by 6%. That also has a flow through effect, if we would have bought this (to an extent?) as a pure equity and amortization, which brings up their EPS to SEK 0.31 instead of the SEK 0.29. I would like to go over to the next slide, which is a little bit of an explanation of how the deal of Marconi deal has impacted Ericsson. The Marconi operation that has been acquired is having a turnover in Q1 of SEK 2.9 billion(?) and having an operating income of SEK -0.2 billion(?). On top of that, we have Marconi amortization of intangible assets, which are basically divided 80% in R&D and 20% in SG&A. Then, what we can call the ‘old’ Ericsson, is basically generating an operating margin of 19.9% which is, as Carl-Henric said, down a percent or so compared to previously. If we then move over to the financial performance, the cash flow, we generated as Carl-Henric said, a cash flow before taking the Marconi acquisition into consideration of SEK 1.5 billion, of which SEK 1.2 billion is coming from dividends from Sony Ericsson. I would also like to point out, the cash flow from their ongoing for Q1 (Marconi operation?) is between SEK -400-500 million. This is basically in line with the cash flow of last year and this is an area where we are putting a lot of focus. Moving over to the operational efficiency trends and the DSO and the inventory turnover as well as the accounts payable days, we landed with 101 days. But this is important to remember; the way we acquired Marconi, was an asset deal. So we acquired SEK 2.4 billion of accounts receivable. If you adjust that, you would have to reduce a couple of days from the 101 days. It’s the same thing with inventory, we acquired, in the deed, SEK 1.8 billion of inventory. This is an area we are putting a lot of focus on, and I assure you that this is an area where we have to improve in the year. Thank you very much.

With that, operator, we are ready to start our question and answer session. May we have the first question please?

Thank you. Our first question comes from Has Malik from Citigroup. Q – Hasnain Malik, Citigroup: Thank you. I’d like to ask a couple of questions around the fixed-line businesses. First of all, can you confirm that the organic, or the old Ericsson fixed-line business seems to have come on… Carl-Henric Svanberg: (inaudible) Q – Hasnain Malik, Citigroup: Hello?

Our next question comes from Edward Snyder from Charter Equity Research. Q – Edward Snyder, Charter Equity Research.: Yes, thank you very much. A couple of questions, first regarding the Marconi and the savings that you anticipate, I know they won’t kick in until the second half of the year, but do you have any…

Operator, we can’t hear the question. Q – Edward Snyder, Charter Equity Research.: Hello? Hello? …hello, can you hear me now?

Mr. Snyder, your line is now open. Q – Edward Snyder, Charter Equity Research.: OK. Can you hear me? Hello? …can you hear me at all?

Can we try another one operator? Hello, operator, are we having some technical problems?

I do apologize. Edward Snyder, your line is now open. Q – Edward Snyder, Charter Equity Research.: Thank you. Can you hear me now?

We can hear you now. Q – Edward Snyder, Charter Equity Research.: Thank you very much. Regarding the Marconi acquisition, I know most of your savings will accrue in the second half of the year. Do you have any guidance at all regarding how large those will be and where you’ll focus those in terms of the operating line? Then also, in terms of the contributions from Marconi to Western Europe and CEEMEA, can you just give us some guidance on how they actually contributed to the YoverY performance in revenue in either of those geographies, I’d appreciate it. Thanks. A – Carl-Henric Svanberg: To start from the back, the majority of Marconi sales is coming out of Europe, so that we’ve been pretty specific about. When it comes to the savings, we are as you see, basically we’re at the SEK 200 million operating loss, but you see in the company as well it is the way it was when we took it over. Then starts all the retracting(?) activities that are supposed to lead to – that bring it up to Ericsson margins in 24 months and it should be there in run rate when we leave 2007. All of the activities as such are basically a constant run of activities. The effects on the bottom line will of course start later because there are costs associated with every activity that is there. You will see accelerating layoffs, for example in Q2 and Q3, and they will start to have effect, so you will start to see some more effects in the second half and then of course even more so when the supply chain is in place in 2007. The layoffs of staff will be dealt with by the end of the year and it will take a little bit longer too, to get through all the different activities around the supply chain. Edward Snyder, Charter Equity Research.: Thank you. A – Karl-Henrik Sundström: Let me only add to that question that we are laying off some 1,600-1,700 people and that is somewhere close to SEK 2 billion of savings which basically will be there in the run rate by the end of the year. Then it depends a little bit on local accounting and local union contracts and practices, how we actually do the deals, so whether they are saved up front so they work during their notice time, or so on, but it’s SEK 2 billion of savings that we would realize in run rate before the end of the year.

We’re ready for the next question, operator.

We will take our next question from Has Malik, from Citigroup. Q – Hasnain Malik, Citigroup: Thanks. I was cut off earlier, so I apologize if this is a repeated question. On the fixed line businesses, can you confirm that your organic fixed line business seems to have come in very weak in terms of revenues, perhaps even as much as 50% down year on year in revenue terms. If that’s accurate, could you explain what the drivers are behind this? Then also, just on the Marconi side, can you confirm given the loss we’ve seen in this first quarter that you still believe the acquisition will be earnings neutral for the year 2006, or at least in the next four quarters from now? Thanks. A – Karl-Henrik Sundström: Again starting from the back, we are, because the business flow and the reactions from the customer have been more positive than we actually expected, it means that we have quite high pressure in the supply chain. Therefore, we want to make sure that we don’t start them and (inaudible) enthusiasm. All the activities will be made, but we want to make sure that we do it in a good way. That means that we will be a quarter or so late to, say a break even position from a year from now. That’s a good anticipated assumption. When it comes to the existing fixed business, I would guess that you are aware of what it says in the report, that some SEK 0.5 billion of Marconi sales is recorded in professional services and in fact another SEK 100 million elsewhere. The rest is recorded. But it is true that our own sales dropped in the first quarter and we still have our own fixed equipment sales that are decreasing, in parallel to that the new generation equipment is increasing. Of course, once you remember with such small volumes as we talk about here the swings can be a little bit bigger between different quarters. It’s not always easy to draw conclusions straight off. Q – Hasnain Malik, Citigroup: OK. Thanks for that. And just to confirm then, on the earnings neutrality point, you are saying that you’ll be at an earnings neutral run rate in a year’s time, you’re not expecting to have an earnings neutral outcome over the next four quarters? A – Karl-Henrik Sundström: (The late part?). Q – Hasnain Malik, Citigroup: OK thank you very much.

We’ll take our next question from Tim Luke, from Lehman Brothers. Q – Tim Luke, Lehman Brothers: Thanks so much. I was wondering, with your inventories being up to 104, would that infer that you had a pretty healthy bookings period in the beginning of the year? And would that – and if you have any comment you might be able to share, as to whether there would be any reason we wouldn’t see a fairly normal seasonality as you move through into the June period, or whether in fact, given better bookings, there might be better than normal seasonality? Any color there would be helpful. Maybe also you could just comment a little bit on the accounts receivable, which obviously were up as well and where you’d like to take that. Thanks so much. A – Karl-Henrik Sundström: When it comes to the inventory, as I said in the presentation, it’s up 4.3, of which 2.4 is acquired inventory as part of the Marconi deal. So that’s a reflection of our different activity. When it comes to any kind of guidance of the space for the next quarter, we don’t give that. The only thing I would like to remind you of is that with Marconi and its bigger professional services content, historical indicators of trends might not be totally correct. Q – Tim Luke, Lehman Brothers: You would expect a fairly normalized inventory level going forward from here? A – Karl-Henrik Sundström: Over time, yes. Q – Tim Luke, Lehman Brothers: Do you have any comment on the nature of the activity and the bookings in the beginning of the year? A – Karl-Henrik Sundström: We don’t disclose orders booked. Q – Tim Luke, Lehman Brothers: Do you want to say whether they’re healthy or – maybe you could cite some of the more important deals in your opinion. Obviously you had a big piece of business in Japan, you had some activity in India? A – Karl-Henrik Sundström: I’m just saying really that we have a healthy business. Q – Tim Luke, Lehman Brothers: OK. Any other reason for anything other than normal seasonality in networks? A – Karl-Henrik Sundström: No. Q – Tim Luke, Lehman Brothers: Good. Thanks. A – Karl-Henrik Sundström: On recording accounts receivable, we came in as I said a couple of days – four days – over last year, and 40(?) of that is explained by the acquisition of Marconi where we had 22.4. We are working hard on this, and the goal of below 90 days for the full year remains and we have worked very hard for that. A 5.5 on the inventory remains as well. Q – Tim Luke, Lehman Brothers: Thanks so much.

Now we move to Tim Long, from Bank of America. Q – Tim Long, Bank of America: Thank you. Maybe if I could just talk a little bit about the pricing environment in the wireless infrastructure space, and as kind of a follow on to that if you could just talk a little bit about some of the consolidations that are going on and some others that are rumored, whether or not you think that is impacting the market in either a good way for Ericsson, because there might be some uncertainty around other vendors, or in a negative way where some other vendors might now have a better global position. Thank you. A – Carl-Henric Svanberg: I would say that the pricing environment is fairly much the same, it hasn’t changed much, but it is also clear that if you go back, for example, a couple of years where it wasn’t much a network rollout but more of their seeking an additional capacity on existing networks, that is one environment where you then have a lot of new opportunities where debts are paid for many years. Of course everybody’s eager to be in there. Following with larger deals, you can have a tougher price environment, but that’s part of the game and isn’t really changing from historically. You can just have clusters of deals. I think that is what also impacts us a bit in the first quarter as we said. When it comes to the larger deals, it is interesting how things have changed a bit because if you go 5-10 years back, there were half a dozen players or so of rather equal strength. I think we are in a situation there, we have a clear lead, some are more or less fairly strong and you have others that are quite weak and the strength of the players, the vendors, have come apart quite a lot and that is breeding, I think, thoughts around the mergers and consolidation. From our side, with the strong position that we do have, I must say that it’s an advantage when we can put all our energy and focus on our own development and on our customers. If you look at only our growth in the last 24 months and from the end of 2003 to the end of 2005, we have grown more than for example, Lucent’s entire mobile infrastructure sales. And I don’t think we would have grown that much had we done a major acquisition. I think from our point of view, we’re fine. I think what we see here are deals not driven so much about the strong players picking up smaller, but rather weaker ones in different fields that need additional economies of scale and increase of platforms, then they come other such – I think principally for us it’s fine that there is a reduction in the number of competitors. Eventually, Lucent Alcatel for example will get strong in certain fields. When it comes to the biggest field for us, the mobile infrastructure, there I don’t think the merger is making a huge impact. But it does grow their strength in fixed business. Tim Long, Bank of America: OK. Thank you.

We will take our next question from Alexander Peterc, from Exane. Q – Alexander Peterc, Exane BNP Paribas: Hi. I’d like you to tell us maybe a little bit about the business development you had with Marconi, since the merger what are the major deals that you could highlight? Then the second question would be regarding North America. Q1 last year was a very favorable low point, so you probably had such high growth (to report this quarter?), how do you see that growth developing over the rest of 2006 (and 2007 there?), thanks. A – Carl-Henric Svanberg: First, if we talk about the Marconi situation, we were encouraged by the reactions from customers, where several of them came to us and said it’s great you acquired this company, its great products, great competence, great people, and we’re glad they’re in a strong company that can develop their capabilities. That has also led to some deals with Vodafone, with Telecom Italia, with Telefónica, basically where they already have ongoing business and the operators are happy with this merger. I think there will be a lot of opportunities here for us, especially since there are such bottlenecks in the transmission networks where they have a strong product program. When it comes to the US, we have started well and this is the year where the rollout of Cingular just continues and that will go through the whole year and into next year also. We shouldn’t – sometimes you hear reflections on what happens after that. I mean, it’s not a relationship with a client like Cingular, who just continue, there will be lots of sales, lots of network build up and capacity enhancements and so on for many, many years. We have also new opportunities arising in the US where, as I said in the (spectrum inaudible?) where other players like T-Mobile or Alltel or all these companies are looking for how they now will go on into the next generation of networks. Lots of business opportunities for us in the US, but it’s clear that of course it’s a strong market with Cingular now. Alexander Peterc, Exane BNP Paribas: OK. Thanks.

We now move to Jeffrey Schlesinger, from UBS Q – Jeffrey Schlesinger, UBS Warburg: Given your visibility to the new big contract wins that you had, what should be expect in terms of SG&A going forward? Is the 12.2% of sales that we saw in Q1 the peak, do you think? And that that will drift down slowly over time? Or do you think that level will be maintained given the business you have in front of you? Thank you. A – Carl-Henric Svanberg: I think that the two aspects of it, I think your conclusion plain and simply may be right. In fact, I would rather like to see us streamed(?) a little bit, simply because the growth that we are achieving on the services side doesn’t and shouldn’t accelerate the SG&A and opex in the same way. Simply because services is growing, opex shouldn’t grow correspondingly. At the same time, it is also so that, as there are quite a lot of opportunities here, we also are working on market growth that still hasn’t happened. So that needs some (inaudible) as well, but it certainly shouldn’t come up. Q – Jeffrey Schlesinger, UBS Warburg: Thank you.

Our next question comes from Kulbinder Garcha from Credit Suisse. Q – Kulbinder Garcha, Credit Suisse First Boston: Yes, thank you. Just a quick question on network rollout and that obviously grew very much year on year, and it seems to be having some impact on gross margins. It seems that with the network rollout deals you’ve got ahead of you, whether it’s Japan, continued rollouts of Cingular, whatever might happen in India in the next quarter or two, it seems that’s going to keep rising in your mix. Would it be fair to assume that even the business if you exclude Marconi year on year gross margins could continue to trickle down or could this be the low point? The second question I have, are you still aiming to keep you R&D on an underlying basis flat despite the sales growth and the top angles you’re seeing? A – Carl-Henric Svanberg: Let me take the last question first and I’ll let Karl answer a little bit more on the network rollout side. That is clear, that on the R&D side, our principle ambition is to see if we can keep the R&D flat, because we believe we have an operational excellence improvement opportunity there. As I said many times, there we are sharing our own ambition and view, not sort of a promise in that sense. But I think that’s where we’re coming from. We believe we can do more with the existing accrual there and achieve a higher output, which we want to have. A – Karl-Henrik Sundström: I think that’s the old Ericsson, and if you include Marconi, including the amortization of the intangible assets that are classified as R&D, it will be somewhere around 29-30. About the mix, I would like to say that we believe we will have the same kind of business mix in the second quarter as we had in the first quarter. Q – Kulbinder Garcha, Credit Suisse First Boston: Thanks, but I’m just thinking even beyond that. Would the network rollout continue to rise up? Wouldn’t that mix continue to go against you, or is there other factors, capacity extensions around the corner that I’m not thinking about? A – Karl-Henrik Sundström: Without giving any quarter on this one, usually what happens, is that then it goes reverse. Because when you’ve got the electronics out there and the capacity demand increases, then you fill in, into the electronics, more capacity enhancement, software upgrades, etc. so over time, it goes the other way around. Q – Kulbinder Garcha, Credit Suisse First Boston: OK. Then just one final quick follow up, on organic sales growth of 15%, what was the year on year currency impact? A – Karl-Henrik Sundström: Now I have to be very clear with you guys, because the accounting models and also how you price things, this is an extremely theoretical thing. Because most of our competitors price in Euros or Euro-based companies, similar like Sweden and all part of the Euro, so that’s one part of it. The other part is, when you have market to market valuation of all the foreign exchange derivatives, it is almost impossible to actually compare to what would have been the impact if you had the same currency today as a year ago. So a very rough estimation, it’s about SEK 3 billion. Q – Kulbinder Garcha, Credit Suisse First Boston: It helps you by SEK 3 billion year on year you think? A – Karl-Henrik Sundström: Yes. On a very rough estimation. A – Carl-Henric Svanberg: But it is obviously quite theoretical, because the invoicing we do now is for deals we made in (inaudible) or whatever which were taken in another than the current environment and current exchange rates a year ago, because we’re selling out of our country into third countries and not in US dollar countries. It becomes quite serious. Kulbinder Garcha, Credit Suisse First Boston: OK. Thank you.

We now move to Sandeep Malhotra with Merrill Lynch. Q – Sandeep Malhotra, Merrill Lynch: Thank you. I have two questions. The first one has to do with the consolidation and the telecom equipment industry. You’ve talked about making acquisitions in the fixed and IP space. Currently you have relationships with Juniper and Cisco. How do you expect that competitive dynamic to evolve as you make more acquisitions in the IP space, and as you become more competitive with these companies, especially on the edge? Second question has to do with Alcatel and Lucent. You’ve talked about how that combination which the two companies claim will be number two in mobility will not impact your mobile infrastructure business. Why do you believe that? Could you give us some insights, especially given that you have a common customer in Cingular? And what the impact in China might be from the Alcatel Lucent combination? A – Carl-Henric Svanberg: Let me start again from the last one and I think you are probably spending more time on following the details of both Alcatel and Lucent and the merger, so you are as good as us to judge it. But if you look at Alcatel, they were gradually moving away from the mobile infrastructure area. They hardly had much on 3G and they were slowly disappearing in 2G as well, and building and focusing their efforts more into the broadband area and the fixed business than converging networks and so on. Lucent, on their side, they’re focused as you all know on CDMA business and basically have one real project only and that’s the smaller part of the Cingular rollout. Even if their numbers, when you add them together, make a good number it’s still quite a while before they can really leverage that in a bigger sense. We at least for quite some time we would expect other competitors to be more fierce. But I mean it is a combination that I am sure can leverage opportunities once they’re through with the merger. When it then comes to acquisitions, we are seeing (inaudible) technology provides a lot of opportunities for us and where the converging networks are rising and developing and so on, there are a number of products here that we are developing ourselves, where we can make acquisitions as an alternative. If we spot companies that have the products we want and we can get it, and we think the products are good enough and we can keep the key people then that could be a quicker way to proceed. But you can also make acquisitions where you lose key people and the technology is not stable enough, and then it is less great to make the acquisition. With regards to Cisco and Juniper, of course they are important here, but principally what I see technology means to us is you get the IT capabilities into every single product, that doesn’t mean that we become head-on competition with them. We are in certain areas, but mostly not, but they’re more important to us. We are working with Cisco on the fixed networks where we take full responsibility and do system integrations and so on, and we have a similar role for Juniper. For us I think it’s more about growing together. Sandeep Malhotra, Merrill Lynch: Thank you

We will now take our next question from Paul Sagawa, at Bernstein. Q – Paul Sagawa, Sanford Bernstein: Hi, thank you very much. A question adding on to the working capital question that came in earlier. If I back out the additional working capital that’s coming from Marconi, it still looks to me that on a year over year basis, and certainly on a quarter over quarter basis, the working capital increased. Yet at the same time, your services business was very, very strong. I guess my belief is that the services ought to require considerably less working capital than the systems, which leads me to the idea that perhaps your mobile systems business is requiring more working capital today than it was a year ago or even a quarter ago. Is this reflective of the working capital needs of new network build outs in the mix, and if the which you spoke about relative to margins were to shift back toward expansions enhancement, then we might see some release of cash out of working capital, or is it just simply you guys got to work harder to keep the working capital down? A – Carl-Henric Svanberg: Your analysis is correct. Services need less capital and in many cases it’s pre-paid, advance payment. The other thing is also correct, that on the mobile infrastructure we are rolling out a number of really big networks. Without giving any (inaudible) to the specific guidance line, it is that, over time, when these networks are released and we are getting past all the important milestones, the next bit is on those networks, will the additional fill in (inaudible)? But that is absolutely correct Q – Paul Sagawa, Sanford Bernstein: OK, so we would expect as the mix shifts, that the working capital would release cash into your cash account? A – Carl-Henric Svanberg: Yes. It’s not inventory, it’s work in progress. I have to remind you, we are building – like in Australia for example, 9,000 sites. That is a huge thing that we’re doing out there. Q – Paul Sagawa, Sanford Bernstein: Thank you.

Our next question comes from Richard Kramer from Arete Research Q – Richard Kramer, Arete Research: Hi, thanks very much. If I could ask, and perhaps this is part of a correction you’re going to issue, about the Sony Ericsson figures that you mentioned on page 19, there’s a very large royalty payment of 922 in the January quarter. Could you tell us where that might be reflected in the income statement, if that indeed is the correct figure? And also, could you talk us through the revenue recognition of ICR? Does it come one quarter in arrears from both external and Sony Ericsson sources? Second, if you could touch a little bit on the provisions which went down by 1.7 billion in this quarter, how those might be reflected in the income statement and whether there were additional Marconi-related provisions taken, or is that something we should see coming later on? Then perhaps a question for the CEO, many of your peers in the industry offer a much greater level of detail in their financial reporting to the extent that operation excellence is reflected somewhat in the transparency of accounts. Is there any consideration for Ericsson to start providing a bit more detail perhaps gross, or operating margins by different divisions, as some of your peers do for their larger divisions? Thank you. A – Karl-Henrik Sundström: To take the table on related products transactions, all of those figures will be changed to be corrected. The 922 you talk about for royalties is way too high – it will come down. But you should look from the press release from us to see the corrected numbers. Q – Richard Kramer, Arete Research: OK, where might that royalty income be reflected in the income statement? A – Carl-Henric Svanberg: Other operating revenues. Q – Richard Kramer, Arete Research: OK. Thank you. A – Karl-Henrik Sundström: When it comes to ICRs, they are recognized basically month by month. Then we try to reconcile them quarterly, both internally, with Sony Ericsson and the other ones, then we also perform the audits with the ones who are paying us to make sure that the right number of units or whatever is the basis for the revenue is correct. When it comes to the provisions, all the provisions have been against incurred costs and the net of provisions has actually not positively affected results. A – Carl-Henric Svanberg: Just a comment on your question about level of detail. I think it’s an interesting one. Maybe if you look at peers and you talk about Motorola or Nokia, then obviously they have the mobile business and network business and so on. But we all do network business, and that’s a little bit of an issue. It’s hard to break things apart. Maybe you can do it for one year, but it’s important will all the dynamics that you can stay stable with it for a while, which is really separate businesses otherwise it doesn’t serve much of a purpose. We’re not going to change anything this year, but as the service business is growing, it’s so strong I think we will come to a point where I think that to really add some value to everyone, to actually follow the (inaudible) separate from infrastructure and do it all the way. Richard Kramer, Arete Research: OK. Thank you.

We will take our next question from Tim Boddy from Goldman Sachs Q – Tim Boddy, Goldman Sachs: Thanks very much. I just wanted to follow up on some of the discussion from the last quarter on the potential for services and major outsourcing contracts. You mentioned at that time that no major operator was ignoring this opportunity. Could you give us an update on where your customers are at, and at what time and over what period we could see further contracts on the scale of, for example, (free Italy?)? Thank you. A – Carl-Henric Svanberg: I won’t really give you any precise guidance on that, and I guess you wouldn’t expect that either. But it is clear that this is an opportunity which everybody evaluates. It’s also clear that if you take start-up of companies, whether you take EMobile or such, are much quicker to jump on these opportunities because it is something that is just one less thing to worry about if you do it, whereas among the incumbents these are related to fairly huge legacy discussions or culture discussions or union discussions and so on, so they don’t change that quickly. In that sense, even if we hear about Vodafone as an incumbent, they certainly are but not to the same degree as Telefónica or Telecom Italia and so on, that would probably follow additionally later. But it is clear for them all that from a business point of view this is something they should seriously look into and it is hard to look away from the opportunity over time.

Operator, we have time for one last question.

We will take our final question from Mark Sue from RBC Capital Markets. Q - Mark Sue, RBC Capital Markets: Thank you. I’m just still trying to get a better sense of why growth will still be moderate this year, particularly if the competitive environment may have intensified. Also share gains get a little bit more difficult. Is there some thought that maybe the visibility you’re seeing in the first part of this year might be catch-up spending, and it might not repeat itself during the back half? A – Carl-Henric Svanberg: That is not an assumption that really has come naturally to us, I must say. There is a lot of activity and I think we’re doing a rather robust estimate here on where the market is going. I don’t know if you have any particular source behind your question? Q - Mark Sue, RBC Capital Markets: I’m just trying to get a better sense of your pipeline, and I guess since you won’t give us bookings booked, I guess with the project you still feel things are very healthy near-term? A – Carl-Henric Svanberg: Don’t forget here that we saw last year 450 million new subscribers, we’re probably going to see north of 500 million this year and it’s going to go on for quite a while. We have mobile broadband with HSPA, we can really create another type of experience where everybody wants to be on the bandwagon as well. You have all the upgrading needs and the transmission networks and so on, bottlenecks from the broadband build out, so I must say again really, I think we are at a pretty robust estimate here. Q - Mark Sue, RBC Capital Markets: OK. Thank you. Good luck, gentlemen.

That will conclude today’s question and answer session, I would now like to turn the call back over to you, Mr. Gary Pinkham, for any additional or closing remarks.

Thank you, Operator. Before we finish today, I would like to remind you all that our next management briefing and capital markets day is scheduled for May 10th and 11th in New York. The agenda and registration information is available on our website. Please register if you intend to participate. Regarding our interim report, if you have any more questions, please don’t hesitate to call either myself or one of our members of the investor relations team to discuss further. Thank you all once again, and see you next quarter.

That will conclude today’s conference call, thank you for your participation ladies and gentlemen.