Carl-Henric Svanberg - President, Chief Executive Officer, Director Karl-Henrik Sundström - Chief Financial Officer Gary Pinkham - Vice President, Investor Relations

Edward Snyder - Charter Equity Research Stuart Jeffrey - Lehman Brothers Tim Long - Banc of America Securities James Crawshaw - Blue Oak Hasnain Malik - Citigroup Investment Research Peter Dionisio - Morgan Stanley Dean Witter Inderbir Singh - Prudential Equity Group, LLC Phil Cusick - Bear, Stearns & Co. Per Lindberg - Dresdner Kleinwort Wasserstein Kulbinder Garcha - Credit Suisse First Boston Gareth Jenkins - Deutsche Bank Mark Sue - RBC Capital Markets Sandeep Malhotra - Merrill Lynch Paul Sagawa - Sanford C. Bernstein & Company, Inc. Tim Luke - Lehman Brothers

Welcome to the Ericsson analyst and media conference call for the second quarter report for 2006. To view visual aids for this call, please log on to www.ericsson.com/press, or www.ericsson.com/investors. (Operator Instructions) As a reminder, replay will be available one hour after today’s conference. Mr. Gary Pinkham, Vice President of Investor Relations, will now open the call. Please go ahead.

Thank you, Operator. Hello everyone, and welcome to our conference call today. With me here in Stockholm are Carl-Henric Svanberg, our CEO, and Karl-Henrik Sundström, our Chief Financial Officer. Before we go into the presentation and to questions and answers, I need to let you know that we will be making forward-looking statements during the call today. These statements are based on current expectations and certain planning assumptions. As you know, the actual results may be different due to a number of factors. These risks and uncertainties are associated with these planning assumptions are outlined in our annual report, which I encourage you to read. With that out of the way, I would like hand over to Carl-Henric for comments about our performance and plans going forward. Carl-Henric. Carl-Henric Svanberg: Thank you, Gary, and hello, everyone. Let me say a few words then on the sent-out material. I will be rather brief because I trust that most of you have listened to the press conference, but nevertheless, we started this conference this morning by talking about the milestones for GSM, where we now have for the GSM technology, reached over 2 billion subscribers. Of course, something that makes most everybody very proud in Ericsson, since we were a major inventor of that technology. We are presently growing by 1,000 new users per minute. It took 12 years to get to the first billion, and 30 months to go to the second billion. If we look at mobile subscribers in the world as a whole, we keep reaching higher levels for saturation penetration. It is also so that GSM paves the way for 3G and HSPA and so on, so the footprint is important when it comes to drive new business for us. GSM wideband CDMA is the winning track, and we have 690 networks throughout the world in 200 countries. We have now about 100 wideband CDMA networks. We spent a little time on how mobility is developing and the fact that the latest forecast for the next five years is pointing at beyond 4 billion subscriptions, maybe up to 4.5 billion. Of course, there is a saturation level somewhere, and that is why we also wanted to highlight the forecast for traffic growth with all new services that come in to play here. Mobile Internet -- when lots and lots of people around the world will have a chance to get Internet wherever they are, even if they do not have a fixed connection or a computer. We also see strong growth in mobile outfits in video streaming, video telephony, and new signal launch and other downloads. Traffic is anticipated to continue to grow, even as subscriptions over time will start to saturate. We also show the expectations where wireline traffic will develop. That is on the next slide. Today we have a steady portion of voice in the wireline networks, including Voice-over-IP. That has a bit of growth, but the overall growth in wireline networks will be from internet and from IPTV. We actually are seeing forecasts now of wireline traffic growing from some 15 million terabytes up to 250 -- IPTV being the majority of that. Those forecasts are built on assumptions that some 50 million households within 5 years will basically get their TV programs through the telephone networks. This is simply the effect of all these very powerful networks that are being rolled out on the wireline side and, over time, also on the wireless side. We talked a bit about vendor consolidation. This is something we see as a natural process for reaching critical mass. We have grown quite substantially over the last couple of years. Only over the last two years or so, grown as much as Lucent’s entire wireless infrastructure sales. As that has happened, it has become obvious to several vendors in the industry that they need to merge if they want to be still a full-range product vendor with end-to-end solutions, or others have to choose to go to more niche segments. Through this whole process, it is obvious that global presence to have the right competence and resources on the ground throughout the world wherever the customers are, to invest enough in R&D and drive technology leadership and also develop operational excellence, which have been our three key words for our success. They will remain key for future development. Our own strategy remains, and is based on organic growth with bolt-on acquisitions. That is how we will see it going forward. There will obviously be opportunities for us while these large mergers are going on, when focus may be elsewhere for some of the vendors. For us, it will be important here to balance long-term growth opportunities with short-term profitability. Generally, we will see a more healthy business environment developing over time. We will take a look at the various regions here. Western Europe is growing by 26% -- very much driven by added Marconi sales and strong service growth. Wireless infrastructure is more or less flat. We continue to see tariff competition driving down tariffs. We are also seeing falling roaming charges, partly because of pressure from regulators. In this environment, obviously operators come under pressure from top- and bottom-line, and there is a strong focus on cost efficiency and a strong focus on introducing new services to drive sales. It is clear that as we go along with these falling tariffs that there is an increasing need for more capacity -- not much maybe that we will see particularly this year, but going forward, traffic will continue up, and needs for expansions. If we take the next one and we look at what we call our CEEMEA regions -- Central and Eastern Europe, Middle East and Africa -- it is presently, with SEK 12.9 billion, our strongest region, 24% growth. A lot of activity all around the region. We have 3D rollouts in several markets. In fact, throughout the region, we are in the process of rolling out HSPA in 12 countries. This is a region where we foresee continued positive development. We will then turn to Asia-Pacific. This is a region also where there are a lot of new subscribers, a lot of new networks. We are rolling out HSPA in Australia and Japan on a big scale. Big projects are running well -- on plan and at full speed. We also had, in this particular quarter, extra strong sales from China, simply because we had more invoicing there, representing rollouts. Invoicing does fluctuate a little bit between quarters, for reasons beyond our control. This has to do with approval processes and the work of final acceptance certificates from the authorities, which is bit of a bureaucratic process. Nevertheless, Asia-Pacific is a strong region -- a lot of opportunities and good development to look forward to. We will then go to the next area, which is Latin America. Latin America is a softer market this year after the very, very strong rollout we have seen over the last couple of years. Operators are catching their breath a little bit, I would say. For most of you that travel in Latin America, I think you all experience and we all see that there are still coverage needs and quality needs, and you will easily drop your calls when you are there and so on. But there are more investments to come. It is also in this region where we see some of the potential CDMA migration to GSM wideband CDMA. We expect such to appear rather soon. So it is still an interesting region with several opportunities. If we then go to the last region and look at North America, we have a bit of a peculiar situation. Cingular HSPA’s rollout is straight on plan, and so also is the 2G expansions. In fact, if you did listen in to their telephone conference, they described how they, according to plan, are rolling out 1,600 sites in the first six months, and they expect 2,000 sites in the second half. We are their prime vendor, and if anything, we gradually grow in market share with them. But we have a particular situation; last year in Q2 we were asked to deliver equipment to their inventory -- extra in the second quarter -- of SEK 2 billion for tax reasons. Both us and Cingular were clear to announce that. That makes the comparison more tricky, but the rollout activity is steady there. It is an unusual situation that an operator has an inventory of that kind. We normally deliver, they decide to roll it out, but that is the way they run it, and they are large and have many suppliers. In this quarter, on the contrary, they have now come to the conclusion that they can thin their networks, so we have not delivered much in 2G for them in the second quarter. We may have similar effects in Q3 before they are back on track again. Besides that, everything is developing in the United States. We have also a little bit of effects from the upcoming Spectrum auctions, where several of the operators are seeking more Spectrum. Once that is done, that will open up further opportunities. If we look at the services, the areas, the activities are continuing strongly. We have a growth of 31% year over year. Managed services continues well and, as we said in the first quarter, we have effects now starting in Q3 and Q4 to kick in from the synergy work on the large managed services field. So we will contributions to Ericsson’s margins from those activities in the second-half here. We have the biggest telecom support organizations throughout the industry, with a 24X7 supervision of 725 [million] subscribers -- in general, a good platform for continued leadership and growth. On Marconi, it is running well, with the comments we had in the first quarter. We have the second quarter, with the integration work running according to plan. We are laying off some 1,600 people before year-end -- 1,000 are to be notified in Q3 and additional 600 by year-end. When we leave the year, we will have completed the downsizing of 25% of the entire workforce. The restructuring of the supply chain continues, and that is why they today have 75% of their added value in high-cost countries to be moving it to low-cost countries. Generally, a good business momentum. We are building backlog and it is going well for us. On the financial highlights, a couple of quick comments before I hand it over to Karl. Sales were up 15% year over year. Obviously you have to adjust for that SEK 2 billion last year, and the inventory trimming in the U.S. this year. On the other hand, we were stronger in China, so maybe there is a wash between the trimming and China there. Gross margin of 42%. The growth from last year is basically related to the higher proportion of services and shorter-term effects from the Marconi sale. If you look at the drop of 1.3% from the first quarter, those are more fluctuations between quarters. These are more driven by product mix, depending on what products and the amount of software that we have delivered. There is no reason to read anything in particular into that. Operating margin of 18.7% came in higher than the market expected. We have still no effects from Marconi on service contracts. Those will kick in in the second half. We have, if you look sequentially, improved our bottom line with SEK 1.7 billion, of which SEK 1.1 billion is from our operations. We have continued success in operational excellence activities and generally, a slightly better business climate. We have about 0.6 which, with 300 from better contribution from Sony Ericsson, had a very good result in the second quarter, and some 300 from a higher level from IPR income. That is a level that we will see continue. Just for the record, if you exclude the amortization of intangibles from Marconi, we are now running at 19.6, so you get a measurement of where the operations are. If we then look at the next slide here on operating income, we are on par with last year, SEK 8.3 billion before tax. Earnings per share is one area down on the bottom line and one area up if you exclude the Marconi intangibles write-down. The cash flow from operations is negative SEK 2 billion. That is coming mainly from two effects, which is increased customer financing with SEK 1.5 billion. There is a somewhat growing interest for customer financing. That has always been a good competitive tool for us. They have been very successful for us over many years. It is not at all climbing back to where it was in the 90’s when operators were being established, especially in emerging markets. These are now generally healthy operators that expand in their territories. There is a somewhat increased interest in customer financing. It is also the fact that we had a strong invoicing in June. That brought up receivables in general, with about SEK 3.5 billion. At the same time, that dates outstanding is coming down with each day, so we have no issues with collections but it is due to the fact that we had strong invoicing in June. If we look at Sony Ericsson, we see sales 40% up, actually growing faster than units, which was 33% up. I think this shows the characteristics of Sony Ericsson -- lots of exciting phones and actually increasing ASP here. The success of the Walkman phone is followed by now the successful introduction of the Cybershot phone and the Smartphones. Income before tax is up to EUR 211, actually representing the strongest quarter ever for the company. In general, a positive outlook and development for Sony Ericsson. We have the market outlook. Previously, as you know, we have given the outlook for the entire mobile infrastructure market. There, we have forecasted a moderate outlook for this entire market, equally moderate for the GSM wideband CDMA track as for CDMA. Since we are not active anymore in CDMA, and we do not interact with customers and do not have the same visibility into that track, we feel it is more relevant and appropriate that we track where we are. That is the GSM wideband CDMA track. We continue to see a moderate outlook for this track. There is no change at all in the way we see this track. There is another phenomena here that is a losing, diminishing interest in the CDMA track, and that adds opportunities, as operators are quite carefully studying how they can migrate from CDMA all the way to the GSM track. We will probably see business there. No change in the market for professional services. We expect to see continued good growth. I believe we continue to be well-positioned to capture market opportunities. With that, I will hand it over to Karl for his financial comments. Karl-Henrik Sundström: Good morning, good afternoon, ladies and gentlemen. I will be try to be as brief as Carl-Henric. On this first slide, I would like to point out a couple of things there. We grew sequentially 13% in sales, and we dropped 1.3 percentage points in gross margin. Operating expenses increased 5%. That came to this SEK 1.1 billion in improved profit from operations. On top of that, other operating revenues increased with 0.3. The area that increased was licensing. Licensing has previously been between 200 and 500 per quarter. We have now seen that increasing. What we see now is it is a level of between 500 and 700 per quarter. Then we had the improved profit from Sony Ericsson. All in all, that explains the SEK 1.7 billion increase in operating income. That really makes it a move from the 16.9% to the 18.7%. But if you adjust for the amortization of intangible assets, we move from 17.9% to 19.6%. Next slide, please. On this slide, I would like to highlight the tax rate. I would like to inform you also that because of the estimated sale of the Ericsson defense business, the tax rate for the full year will be somewhere between 28% and 30%. The other area I would like to highlight is that the earnings per share is also affected by this amortization. If we would have excluded amortization of intangible assets, then earnings per share would have been SEK 0.38 instead of the SEK 0.36 that is reported. Next slide, please. If you look at the cash flow, we had a working capital build-up during the quarter, and that consists basically of -- inventories was basically flat, despite that we grew sales by 13%. We are running a huge number of big projects that are having an average duration time of six to nine months. As Carl-Henric mentioned, we had sales coming in late in the quarter, explaining around SEK 3.3 billion in increased accounts receivables, and we also had customer financing for SEK 1.6 billion, in addition to that. We also had, which is normal when you run big projects, we also liquidated or used provisions against cash, which is of the [report that is out there] of 2.8, around SEK 2 billion to SEK 2.4 billion, ending up in a negative cash flow for the quarter of minus SEK 2 billion. However, we are all running a business now with the highest solidity with equity ratio in the history of Ericsson, almost 54%. Next slide, please. As Carl-Henric mentioned, the collection went in the right direction. We drew down days outstanding by 6 days to 95 days. We now believe that we are in the range of being able to reach our target of 90 days. Inventory turnover increased, and it is about the same level as last year. We still have a lot to do to reach the target of 5.5. The payable days remained around the level as last year, a slight improvement compared to the second quarter. With that, I will hand the call over to Gary.

Thank you, Karl. Operator, we are ready to start our question-and-answer session now.

(Operator Instructions) Our first question today comes from Edward Snyder from Charter Equity Research. Please go ahead. Edward Snyder - Charter Equity Research: Last conference call, you pushed out your expectations from Marconi merger being neutral to earnings in the second quarter of ’07. Is that currently your assumption, or has that changed since we last spoke? Carl-Henric Svanberg: No, that has not changed. Edward Snyder - Charter Equity Research: Okay.

Thank you. Our next question today from comes from Stuart Jeffrey from Lehman Brothers. Please go ahead. Stuart Jeffrey - Lehman Brothers: Thank you. I had a question for Carl-Henric. You mentioned the business environment seems to have improved over the last few months. I was hoping you could go into a bit more detail as to whether that is operators looking to do more with in terms of putting out contracts, or if it is also tied into perhaps seeing less vendors or less pricing power, less pricing pressure in the market. Thank you. Carl-Henric Svanberg: Primarily, I would say that the comment was more meant to describe that we are seeing somewhat more activities, somewhat more spending, somewhat more projects coming to the market without necessarily changing the outlook, as such. It is slightly more than we have seen before. Also, when it comes to the price pressure, over the many years, and also through the years when I have been in here, we have always said that the price pressure and the price erosion is a normal part of our business life, because of smaller electronics and more higher -- more scale and so on. We have not really commented on it that it is accelerating. We said in the last quarter that we felt a bit more pressure over the last quarter or two. I think we are right now back into business as usual. That does not mean that it has gone away. It is there, but it is where it has always been, I would say. Stuart Jeffrey - Lehman Brothers: Thank you.

Thank you. Our next question today comes from Tim Long from Banc of America. Please go ahead. Tim Long - Banc of America Securities: Thank you. If you could just comment on some of the developments that have been in the press in the emerging markets, particularly in Brazil with Vivo and what has gone on in India with some of the carriers with GSM potentially gaining some favor. If you could just give your views on that, and what potential opportunity that could represent for Ericsson over the next year or two, that would be great. Carl-Henric Svanberg: I think what we are seeing is that it seems that while operators in the CDMA track have been a bit wondering really where their future will take them, because there are fewer in this track, hence the pricing is higher, hence the variety is lower, and roaming is less easy and so on. From that, I think we have started to see less growth in the segment and more operators considering to migrate from CDMA over to GMS wideband CDMA, also because of a more attractive long-term roadmap. This has actually happened now, and it is accelerating. Vivo, as you mentioned, is one of those that we can all read about, how they seriously considered this change. You have others in India doing the same. I think it is likely that you will see such things happen. Since we are well-established in this market for a long time, it certainly adds to our opportunities. I would say sometimes even more than normal business, because these are cases where, if you have a network like the [Tensla] one in Australia that is already up and running, fully loaded with subscribers, that means that you need a very, very efficient network rollout and a swift cut-over. This is not something where it is not life and death whether you are a month or two late. This has to be just spot-on [time]. With our strong rollout resources, local and so on, I think it represents opportunity for us. Tim Long - Banc of America Securities: You said roadmap -- is it safe to assume that these carriers in the emerging markets do have WCDMA on their timeframe? I imagine, because they are not going directly to it, is it safe to assume it is several years away before they are even looking at taking the next step? Carl-Henric Svanberg: There is an exciting comment to make on that, but first just to say different from where we were maybe three or four years ago, I would say we have today 3G equipment that is more or less upgradeable to wideband CDMA, and you can use a lot of the same -- both upgradeable use a lot of the supporting equipment around it. So it is well-prepared for it. They need to take future roadmap seriously into consideration. Right now, the prime focus in that market is cheap voice, but the network as such is not more expensive to build in wideband CDMA technology than in GSM. How fast wideband CDMA will come I think is very much driven by where handset prices are, and they are quickly coming down. We must not forget when we roll out the HSPA in 12 markets around the CEEMEA region as an excellent, and in [inaudible], Estonia, in Asia -- each very much because that is the only way people out on the countryside can get to the internet. It would not be the right conclusion to draw, that high speed networks is something for mature markets, whereas emerging markets would look more for GSM. Over time, that will not be the case. Tim Long - Banc of America Securities: Okay, thank you.

Thank you. Our next question today comes from James Crawshaw from Blue Oak. Please go ahead. James Crawshaw - Blue Oak: Couple of questions, if I can. Firstly, there was a question earlier today in the press conference about your estimates for the number of net mobile subscriber additions during the quarter. I wonder if you have any time to reflect on that. In your press release, you talk about 200 million. That is up from 100 million last quarter, and 105 million last year. If you are sticking to your target of 500 million subscribers being added this year, are you implying that in each of the next few quarters, you would only add 100 million? I just wanted to see if you had time to check those numbers since that question was raised this morning. Secondly, on your wireless infrastructure market forecast, you are excluding the CDMA portion from it now. I think Lucent's revenues are down something like 20% in the first-half of this year compared to last year. They are primarily a CDMA vendor. The question is, if you were to include CDMA in your market definition as you had previously, would you be reducing that guidance from 5% to 10%, or perhaps a lower figure? Thank you. Carl-Henric Svanberg: Let me start by the number of subscribers. The right number of subscribers for the first half is 220 million. That was a rounding error that created the typo there in our press release, so the right number for the first half is 220 million. For the second quarter, it is 120 million. Those numbers have been rounded. That is where we are, and we expect to be somewhere in the 450 million to 500 million subscriptions for this year, which will be a record growth year, by the way. To just make the outlook very clear there, GSM wideband CDMA, we have expected moderate growth and we continue to expect moderate growth, with no change other than that as I said -- actually, a slightly more positive outlook. The CDMA track is actually starting to decline as we speak, and half of this, we take it out. Obviously, if we included it for something, it would matter for something. But from a more philosophical note, the traffic in the world networks are actually growing about the same. The question now is then more as you get doubts in the CDMA track, if everybody would slope very quickly, it would add growth to GSM. If everybody would sit and wait and think, of course we will have poor growth in the CDMA track and nothing happen for the GSM wideband CDMA track. I think we are somewhere in-between. We continue very much as we have expected, once we get some add-ons from sloping operators. James Crawshaw - Blue Oak: Thank you. That is very clear.

Thank you. We will now move to our next question from Has Malik from Citigroup. Please go ahead. Hasnain Malik - Citigroup Investment Research: Thank you. I have a couple of questions. First of all, do you still see your revenue mix in mobile systems improving substantially as we go into the second half of 2006? Then, the other one was, can you give us an update on the management situation at Ericsson mobile platforms after the departures ended to the [inaudible]? Thank you. Carl-Henric Svanberg: I have to ask, to be clear, what the revenue mix in mobile systems is? Hasnain Malik - Citigroup Investment Research: In terms of the mix between network rollout and more capacity upgrade. This is something that I understood you talked about at your capital markets day. One of the reasons you gave for a potential outlook for stable margins in Q2 was an unfavorable mix continuing but something that would improve as we go into the second-half of the year. Carl-Henric Svanberg: I would say in general that the portion of network rollouts have increased, and actually it is coming back a little bit to the way it was before the crisis -- that is, before we had a big down-turn in this industry, we used to take care of more or less the projects more on a turn-key basis. We had seen the trend during 2003 and 2004 both with more capacity increases and with lesser rollout, and also that operators wanted to take care of part of the rollout activities themselves. I think everybody has not been so successful with that, as we are seeing a trend back to where we take more responsibility for the whole thing, and that is fine, because that is a competitive tool for us. We have expertise there, and it is a profitable business -- not every time, maybe it is as profitable as the systems business in general, but it is a profitable business. That trend is there and is going to stay, I would say. What was the second question? Hasnain Malik - Citigroup Investment Research: The second question was on EMP and… Carl-Henric Svanberg: Were you happy with the first question? Hasnain Malik - Citigroup Investment Research: Could you perhaps expand your answer on the first question to an impact on your expectations on the trends in margin, as a result of that more sustained, high level of network rollout? Carl-Henric Svanberg: I think we are already at a high level of network rollouts, so we are not increasing it from here. It is more when you compare backwards that you see a difference, but we are where I think we expect to be in the mix, as such. Margin forecasts, we do not give for the company but it is clear that everything else the same, we will have added contributions from the synergy work in the services contract and from Marconi. But we are in a steady state when it comes to the rollout portion. Are you happy with that? Hasnain Malik - Citigroup Investment Research: Absolutely, thank you. Carl-Henric Svanberg: When it comes to Sandeep, Sandeep is a great engineer and he has added tremendously to the design activities and technical activities of Ericsson. However, this is a large area with 2,000 highly qualified engineers, and an extremely strong team. We feel quite comfortable with the management change there, although of course we would have liked him to stay. Still, I do not think that EMP as such has weakened. I think we had chance also to strengthen it a little bit commercially. EMP is looking good. Hasnain Malik - Citigroup Investment Research: Thank you.

Thank you. We will now move to our next question from Peter Dionisio from Morgan Stanley. Please go ahead. Peter Dionisio - Morgan Stanley Dean Witter: Thank you. Could you just clarify the comment you made earlier on vendor financing? Given that your emerging market business continues to grow, and given the big build-outs that are occurring there, do you expect to see major changes in your vendor financing levels over the next six to 12 months? Karl-Henrik Sundström: We have said for a while that there is an increase in customer finance. However, we are also working -- since we are not the bank, we do not want to be a bank, but sometimes things are parked for a while in our credit portfolio. In those markets, emerging markets, it usually works with ECAs, which is expert credit agencies, where you get a guarantee. So in reality, you will see some increases because there is a need for customer finance, but it is, as Carl-Henric said in his presentation, it is not like the growth in the 90’s, which was a big increase. It can sometimes be lumped in between quarters, but this also changes, perhaps since we are lifting off and selling off credits when they are bankable. Carl-Henric Svanberg: I think it is important also that we do understand the difference in the business environment from the 90’s, because new operators were born and customer financing was their way to get started and build up their operations. Today, there is hardly a network in these markets that, at the end of the owner line is not owned by whether it is [Rascomb] or whether it is MTM or whether it is [AT Selat] or [Maxsersian] in Malaysia and so on. There is a cash-generating parent at the back-end, so then the financing becomes just one part of the many competitive tools here. They will not grow to the levels it once was. Peter Dionisio - Morgan Stanley Dean Witter: Great, thank you.

Thank you. We now have a question from Inder Singh from Prudential. Please go ahead. Inderbir Singh - Prudential Equity Group, LLC: I wanted to just ask about your philosophy on doing the bolt-on acquisitions that you referred to in your press interview earlier. Marconi has been the biggest one you have done so far. Do you see yourself doing similar sized bolt-on deals, or are you more willing to do larger deals as you go forward? Some of your vendor competitors obviously will probably be distracted over the next couple of years with the very large deal they are doing. Is it fair to assume that you do not expect to do anything that large, but then you see yourself doing perhaps Marconi-sized acquisitions? Carl-Henric Svanberg: When we talk about bolt-on acquisitions, I would say we probably talk about companies from the small, [NetSpeed Hour] or [inaudible], or so opt to the Marconi-size companies or thereabouts because these are companies that, even if you tend to talk a lot about Marconi here -- which is of course exciting, but remember it is 8% of our total sales -- it means that where we focus the energy is still on the customers and where it should be on technical development and so on. I think that has been an advantage to our strong growth over the last couple of years. We want it to stay our strong advantage. Actually, I think it points out that some of the other guys will be quite busy on their integration work and that is an advantage to us that we do not want to lose. I think where you would see us do acquisitions is should be less likely on the wireless side, unless some smaller asset would come up very favorably or something. I would not expect too much on the wireless side but maybe more on the converging IP technology and networks -- maybe there could be products or so that could add value or speed up the alternative of internal development. Inderbir Singh - Prudential Equity Group, LLC: Thank you.

Thank you. We now have a question from Phil Cusick from Bear Stearns. Please go ahead. Phil Cusick - Bear, Stearns & Co.: Comments earlier indicated that seasonality in 3Q would be a little stronger than typical. I am thinking that 3Q would be off a little more than typical, yet you still have confidence in the year. Could you give us an idea as to what you are seeing that should swing things back up in the fourth quarter? Are there regions that you expect to get better? Are there contracts that are coming through? Could you give us an idea there? Thank you. Carl-Henric Svanberg: First of all, we have a pretty good situation when it comes to the contract flow. We also have a tendency right now of more larger contracts with longer lead times than we have had in the past, when it was more capacity enhancements. The Q3 comment is more related to the fact that we will have continued inventory trimming with Cingular. That is something we know. As always, we do not give guidance. The third quarter is still there to happen, but there will be an effect from the Cingular inventory trimming for yet another quarter. The whole outlook for the second half is good for us. Phil Cusick - Bear, Stearns & Co.: I just want to make sure I understand. If it were not for the Cingular inventory trimming, you would see stronger-than-typical seasonality from first-half to second-half? Carl-Henric Svanberg: I would say that primarily because of the Cingular effect and somewhat also you could have a bit of fluctuation for China here. They are a little bit unpredictable. But the roll-out pace is very predictable. At the same time, the second half looks good overall, so you could have somewhat of a stronger finish if everything was all the same. Phil Cusick - Bear, Stearns & Co.: Let me make sure I understand the China comment. You mean for 2G, the roll-out is very predictable? Or are we thinking about 3G? Carl-Henric Svanberg: The roll-out that goes on, that is all 2G. The roll-out in China is very steady -- the delivery of equipment and the build-outs are very steady. For administrative reasons and the way they have centralized their purchasing, it becomes a very bureaucratic routine. It sometimes is a little bit unpredictable exactly when invoices are going to take place. That is why we have that small invoicing in Q1 and suddenly large invoicing in Q2. It could very well be a little bit softer in Q3 and then strong in Q4 again -- that is something we have to accept. It is beyond our control. Phil Cusick - Bear, Stearns & Co.: I see. Thank you.

Thank you. We will now move to our next question from Per Lindberg from DKW. Please go ahead. Per Lindberg - Dresdner Kleinwort Wasserstein: I was wondering, your comments regarding the fall-off in the interest in CDMA, whether that can also be applied to the Chinese technology, TD-CDMA, as an argument against that in subsequent phases? Then I have a separate follow-up, if I may. The reasoning being, we have learnt in the past from TDC, from CDMA, that you take a very big risk as an operator if you go with a more limited technology. Is it that an argument against TD-CDMA in China? Carl-Henric Svanberg: I think what you will see in China is a little bit related. It has a slight political dimension. I do not think we can look away from that. Here is a country that is similar to the U.S., but maybe that was more market-driven, like Japan and so on. Here is a market, here is a country, it is a nation that wants to build their own technology and wants to create room for their own IPR’s and so on. We believe as you do that it will not be easy to drive this to a very successful business because scale may not be good enough, and because of Spectrum issues that probably we will not see any TD-CDMA outside China. It will also come back to scale on handsets and so on. But it is a fact -- it will happen. They will not go away from that. There will be a license and a network rollout, but I would doubt in five or 10 years that will have proven to be very successful. Per Lindberg - Dresdner Kleinwort Wasserstein: Thank you. I have a separate question, if I may. You seem to have a strong order momentum, as you indicated, but one can also argue, in relation to your inventory, that you have a very big backlog of revenues yet to recognize, especially since a lot of that is really installment of base stations on customers’ premises. Is that a correct conclusion? Carl-Henric Svanberg: Yes, it is. Per Lindberg - Dresdner Kleinwort Wasserstein: Thank you.

Thank you. We now have a question from Kulbinder Garcha from Credit Suisse. Please go ahead. Kulbinder Garcha - Credit Suisse First Boston: Thank you. Karl-Henrik Sundström first -- could you please clarify the reduction in provisions? Could you just confirm that there was no P&L impact from that? Also, please explain why they went down by over SEK 2 billion sequentially? The second question for Carl-Henric Svanberg, regarding visibility on contracts you signed, I noticed Japan did not show up in your top 10 markets. I would assume that, given the sizable upgrades in networks that have been happening at Softbank and with [e-Mobile] rolling out, a very substantial network -- both of your operations quite strong. That should mean for the [accelerate], is that something that is going to more help 2007 revenues, or should we see an impact from that later on this year, do you think? Karl-Henrik Sundström: The first question is that we had no impact, no material impact. That is why I was so clear when I described the cash flow, because these are mainly related to big projects and project risks that happen, that you then take against cash. That is why it is in the cash flow. Carl-Henric Svanberg: On Japan, I think the list would have had to be just a little bit more and you would have seen Japan there. I think you are right that Japan would rise in that league. Kulbinder Garcha - Credit Suisse First Boston: Should we see the impact of the material of taking your Japanese revenues this year, do you think? Carl-Henric Svanberg: You will start to see it a bit because they will gradually build up. We are increasing activities, actually with several operators, not only with [e-Mobile] but you will see it grow with it. Kulbinder Garcha - Credit Suisse First Boston: Just one final thing, just on the benefits you should see from improving services efficiency and Marconi cost-savings. Am I right to assume that is really a year-end issue for Q4? Could we see any benefit, for example, from Marconi cost savings even sooner than that? Carl-Henric Svanberg: You will see everything else alike. We are not guiding margins as a whole. Remember that Marconi is still a smaller part of our business. Effects from services and from Marconi will start to kick in in Q3, but it is also right to say that they will accelerate in Q4, but they will start to kick in in Q3. Kulbinder Garcha - Credit Suisse First Boston: Thank you.

Thank you. We will now go to our next question from Gareth Jenkins from Deutsche Bank. Please go ahead. Gareth Jenkins - Deutsche Bank: Just two points of clarification, if I could. Firstly, on the Vivo contracts, I think they have just announced a $500 million contract. I think it is between you guys and Huawei. Could you just give us a sense of firstly whether you will be doing the core or the access for them? Secondly, it sounds like you are expecting a sort of slightly smaller revenues but higher margins on these types of contracts going forward. A second point of clarification -- you seem to imply that the networking capital move may reverse, given the strength in invoicing in June. Can you actually state whether that is correct or not? Carl-Henric Svanberg: Would you just clarify the last question? Gareth Jenkins - Deutsche Bank: Yes, I just want to try and understand whether you are saying the actual networking capital will see a reversal in the next quarter because of the strong invoicing you had in June. Carl-Henric Svanberg: I think I will start on that note. The strong invoicing in June should normally, of course, have resulted in lesser working capital, but I think it was -- Lindberg is right during his assumption that the activity and the build-up of backlog is quite important to understand here. When it comes to Vivo, I have to trust you on the announcement. We have not seen it ourselves, but it is clear that they were expected to announce it today, as we speak. They are announcing there, and I assume that we have 100% of the core and majority of the radio. Gareth Jenkins - Deutsche Bank: Thank you.

Thank you. We will now move to our next question from Mark Sue of RBC Capital Markets. Please go ahead. Mark Sue - RBC Capital Markets: Thank you. Just a follow-up on the M&A, and specifically as it relates to the upper limits of your acquisition. We understand that it will be on the wireline side. Would you consider something as large as a Juniper Networks, or should it be more of smaller components to your IPTV portfolio? Carl-Henric Svanberg: I do not think we should comment on our roadmap for acquisitions here. Mark Sue - RBC Capital Markets: Any thoughts on your focus on driving opportunities in IPTV? We understand you have the ISIMS component of that. Carl-Henric Svanberg: I think it is clear that IPTV, what happens in the networks here as they get upgraded to quite some substantial capabilities, is that we will see more of triple-play and true entertainment coming into the telephone networks. IPTV will probably be the strongest driver of all factors in wireline networks. Obviously, our focus is very strong in that field. Mark Sue - RBC Capital Markets: Okay, that is helpful. Thank you.

Thank you. We will now move to our next question from Sandeep Malhotra from Merrill Lynch. Please go ahead. Sandeep Malhotra - Merrill Lynch: Thank you. Could you please comment on the impact of the ongoing consolidation with yourselves and Nokia Siemens controlling about two-thirds, or 70% of the market? On pricing going forward, what have some of the discussions with the operators been? Is there some concern about supplier concentration? My second question has to do with the impact of longer-term contracts and customer financing on working capital going forward. Thank you. Carl-Henric Svanberg: I would say that, on the market shares there, I think you were probably overstating the share that Nokia Siemens, Ericsson will have but I think you are right that there will be fewer stronger players that will be able to invest more and contribute more to the development and new exciting technologies. At the same time, I think we have not really seen yet -- it will take such a long time for even Nokia and for Lucent and Alcatel to actually go through their mergers. I think we may have to wait another couple of years to see where we are in terms of market share. I am sure also that it will be tough for smaller guys to survive in that environment, so that is probably a conclusion I can draw. Sandeep Malhotra - Merrill Lynch: A quick follow-on to that, do you then expect that Nokia Siemens and Alcatel Lucent will actually try to go for footprint expansion, putting more pressure on pricing in the interim, before there is what one would call more stability in pricing? Carl-Henric Svanberg: I think they have tried for a while to see if they could do that as an alternative to merge. I think that is what we have seen over the last year or so. I think they have drawn a conclusion from that, and ended up by merging. I would not it logical if I sat there and had done this huge acquisition to add to that price pressure. I would probably rather like to get my synergies right and enjoy the bigger scale that I already have. It does not seem logical to me, but I think it is a good question to put to those guys. Sandeep Malhotra - Merrill Lynch: Then a question on working capital, given the length to the contracts is going up, and vendor financing longer-term, what is the impact on working capital? We have seen that get progressively worse. What should we expect going forward? Carl-Henric Svanberg: I think we need to understand that with larger contracts, we are seeing a higher working capital. That is a fact. I think we have seen the most of the growth, because we have seen the shift from capacity enhancement to larger contracts. The trend should not continue much longer, but it is tying more capital when contracts become bigger. Sandeep Malhotra - Merrill Lynch: Thank you.

Thank you. We will now move to our next question from Paul Sagawa from Bernstein. Please go ahead. Paul Sagawa - Sanford C. Bernstein & Company, Inc.: First of all, I think there is a lot of concern in the marketplace when you look at the subscriber growth that, given the world population is 6 billion, that we are going to run these margins, run dry and work [inaudible] rather than less quickly. One thing that comes up is that a lot of those subscriptions are just SIM cards for people arbitraging rates, et cetera. I am wondering if you could talk a little bit about how much longer and how much farther do we think subscription growth can really go in the marketplace. Maybe allay a few of those fears. Also, we talked a little bit about the players neatly right behind you, with regard to the mergers of Alcatel Lucent and Nokia Siemens, taking the next 4 players and making them 2. What about the players behind them? I think there is some turmoil out there. You have had, in certain cases, Nortel and Motorola and Huawei willing to really be price spoilers in for deals. Do you think, given the financial woes of Nortel, et cetera, that some of that aggressiveness has died off? What are you seeing in the marketplace with regard to bidding for new deals? Carl-Henric Svanberg: I would say that all their situations have not changed, other than that they got bigger, stronger competitors. Their abilities to price fight -- remember that all the contracts you take, you still go into a strong relationship that will last for 10 or 15 years and it is very important to have a reliable partner that you can stay and grow with throughout that period, and migrate to newer technologies and so on. This is not an industry where you bargain yourself to single occasion and contracts here and there. I think in that sense, things have not changed to the worst in anyway. I would rather say it has changed to more stability. When it comes to subscribers, your point is important here because obviously, we can discuss whether we will grow our subscribers or subscriptions to 3.5 billion or 4.5 billion, but we will get to a point where we started to add maybe low-traffic subscribers who are not even on SIM cards or what have you, but the important thing to keep track on here is traffic. I think the fact that we have followed subscribers, as an industry, comes very logically from when there was no mobility and that was the number to follow. As we go along, we will follow much more closely the traffic in the world networks. There, just as a couple of comments, remember first of all that we, for example, in Europe, we are speaking 150 minutes, 200 minutes a month; the U.S., it is at 700 minutes a month and lots of offerings there at a thousand, or whatever. We see a similar trend throughout the world -- cheaper. When you speak a couple of hundred minutes a month, it means that you talk seven or eight minutes a day. We still have the vast majority of the calls made in fixed lines, and the transition there has only begun. Then, we should not either forget the growth of internet into the mobile. I think as we go along, and I am not going to make a big speech here, but as we go along and into capital market base and more thorough presentation, it will be important to try to create a better understanding of what actually drives traffic, because that is, at the end of the day, what drives the need for infrastructure. Paul Sagawa - Sanford C. Bernstein & Company, Inc.: Thank you.

Operator, we are ready to take our last question.

Thank you. Our last question comes from Tim Luke from Lehman Brothers. Please go ahead, sir. Tim Luke - Lehman Brothers: Just to clarify, if I may, last quarter with respect to the margin outlook, it did not appear to come across in terms of where the street went vis-à-vis what you were expecting, and you reset the guidance for margin at the analyst day. Subsequently, it seems to come in a little better. Perhaps you could just clarify some of the key swings there. More importantly, in terms of the question, with a seasonally lower revenue in the third quarter, and then a seasonal up-tick stronger than you had previously expected in the fourth quarter, what should we think of some of the issues framing margin for the second half? Previously you said directionally, it will be up with services and Marconi in the second half, infrastructure will be the same margin -- now, having had a slightly better-than-expected second quarter, should the third quarter with the seasonally lower revenue be expected to be flat or lower? I know you are not providing guidance, Carl, but just in terms of framing the issues so that we come out in a place that you feel comfortable with. Carl-Henric Svanberg: This is obviously a favorite topic. I can certainly understand that. We do not give guidance. I think everybody can clearly see where that takes us if we start to do that. It is clear that for the second half as a whole, we expect normal seasonality or better, with maybe a somewhat stronger focus on the fourth quarter than on the third quarter. Any sort of loss or add to a normal quarter will of course have its incremental effect. Then, every quarter is a new quarter and it depends on the particular product mix and it depends on the particular contracts we take. There are always variations there, but you have seen that over many, many quarters. In addition to all of this, everything else is the same, we will have additions kicking in from the third quarter from the service contracts and the Marconi integration work. Tim Luke - Lehman Brothers: So you still expect a stronger progression in the margin as you move through the year? Carl-Henric Svanberg: We will have the effects from the service integration work and the Marconi integration work, yes. For the rest, we are not guiding. Tim Luke - Lehman Brothers: With a lower-than-seasonal third quarter, or you are not saying it is a lower-than-seasonal period in the third quarter, you think stronger-than-seasonal fourth quarter? Carl-Henric Svanberg: We are saying that in the third quarter, we will continue to see effects from trimming networks in Cingular. That in itself will be a large part of a [inaudible] up to third quarter. You need to realize that it is difficult at this point in time to give a precise opinion about where the third quarter is going to be, but on top of a normal development, you will have that effect from Cingular. Tim Luke - Lehman Brothers: So we would look for the margin improvement more focused on the fourth quarter than the third quarter clearly? Carl-Henric Svanberg: That must be a right conclusion. Tim Luke - Lehman Brothers: Thank you so much. Good luck.

Before we…[inaudible]…inform you about our next management briefing summit, which is scheduled for November 15th in Tokyo. We will post an agenda and registration information on our website within the next few weeks, so keep an eye out for that and hold the date. Regarding our interim report, please do not hesitate to call me or the Investor Relations team if you have any further questions. Thank you and, once again, goodbye.

Thank you. That will conclude today’s conference call. Thank you for your participation, ladies and gentlemen, and have a nice day.