business environment & strategic priorities

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© Telefonaktiebolaget LM Ericsson | Ericsson Investor Update 2016 11 10 | Page 9

Business Environment & Strategic Priorities

N O V E M B E R 1 0 , 2 0 1 6 N E W Y O R K

Investor update 2016

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Business environment 2016

›  Sales and gross margin declined primarily related to mobile broadband business

›  Professional services margins negatively impacted by major IT projects in start-up

›  IPR market shift continues, growth potential in emerging markets and new licensing platforms

›  Cost and efficiency program on track, further short-term actions to adapt to lower demand

›  Accelerated company transformation – New operational structure live since July 1st

Challenging macro, especially in emerging markets, impacting operator investment levels

Lower pace of operator investments in Europe, US stable and China at continued high levels

Continued industry convergence across telecom, IT and media sectors

Increased customer focus on digital transformation enabled by 5G, IoT and Cloud

Market Ericsson

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Current industry trends

›  Weaker demand for mobile broadband in 2016, current trends expected to continue short-term

›  Overall a weaker macro development than expected, especially impacting emerging markets

Mobile infrastructure

2015 2016 2017

2.2

2.0

2.8

3.0

2.6

2.4 2.4

2.9

2.1

2.8 2.5

2.4

Macro development

Source: EIU

Global Real GDP Growth % YoY change RAN equipment market, % YoY change

Forecast Oct ’15

Forecast Oct ’16

Source: Ericsson

This slide contains forward-looking statements. Actual result may be materially different.

90%

100%

60%

70%

80%

2017 2016 2015

-2%

-6%

-10%

-15%

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Magnus mandersson E x e c u t i v e V i c e P r e s i d e n t

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On customers’ agenda

› Higher speeds and decreased latency on 4G

› New spectrum releases

›  Increased focus on 5G and IoT

› Digital transformation, e.g. OSS and BSS

› Transformation in telecom core

› Cross-industry synergies, e.g. media

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Evolution of Strategy and Structure for faster execution

Networks

IT & Cloud

Industry & Society

Media

Establish leadership in targeted areas

2 Expand business in new areas

3

Radio,

& Trans- mission

Telecom Services

Future/ Emerging

Present/ Large

Media

OSS/ BSS

I&S

Cloud

Excel in core business

1

Core

Core & Targeted areas Segments

IP

Customer Group

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Expand in Industry & Society

strategic business direction

Establish and extend in IT & Cloud

Excel in Networks

Extend in Media

A leading ICT transformation partner for our customers

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7.6%

2014 Actual 2020

Efficiency improvements

Monetize Networks

Three Focus areas to drive incremental improvements

Build success in IT & Cloud, Media, Industry & Society

This slide contains forward-looking statements. Actual result may be materially different.

2016 09 rolling 4Q

2020

Operating margin (incl. restructuring) ILLUSTRATIVE

business environment & strategic priorities

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