first QUARTER 2017–Baseline: Current run rate, i.e. annualized Q2 2017 ›Reductions in addition to Supply, i.e. closing manufacturing sites –Rightsizing due to lower business

SECOND QUARTER 2017

July 18, 2017

Peter Nyquist Vice President Investor Relations

SECOND QUARTER 2017

July 18, 2017

This presentation contains forward-looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read our earnings reports and our most recent annual report for a better understanding of these risks and uncertainties.

Börje Ekholm President and CEO

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© Telefonaktiebolaget LM Ericsson 2017 | SECOND QUARTER REPORT 2017 | July 18, 2017 | Page 5

› Significant cost reductions to restore

profitability

– At least SEK 10 b. run rate improvement over 12

months

– Primarily in service delivery and common costs

› Increase pace of innovation and new

business development

› Focused and technology led approach

– Invest in R&D for competitiveness in Networks

– Stabilize IT & Cloud roadmaps and focus on new

portfolio

– Invest in automation and review contracts in

Managed Services

› RAN market estimated to decline high single

digit percentage in 2017

› Increased risk of market and customer project

adjustments

– Estimated negative impact on operating income of

SEK 3-5 b. coming 12 months

Focused business strategy

At least double the 2016 operating margin, excluding restructuring charges, beyond 2018

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› Initial signs of traction in strategy

execution

– Break-through contract with Vodafone UK

– Positive customer feedback on ERS

competitiveness

– Agreement signed to divest Power Modules

– Successful review of Managed Services

contracts – 9 of 42 completed

– Plan in place to improve performance in IT

& Cloud – focus on product roadmaps for

new portfolio and project execution

› Challenging underlying performance

– Sales adjusted for FX -13% YoY

– Networks margin decline due to lower

software sales

– Continued significant losses in IT & Cloud

› Operating cash flow SEK 0.0 (-0.7) b.

Second quarter 2017

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› Europe and Latin America (-11% YoY)

– Continued reduced mobile broadband investments

– Slowdown in Mexico; growth in Brazil

› Middle East and Africa (-17% YoY)

– Some, still limited, signs of recovery in

macroeconomic environment

› North America (-7% YoY)

– Reduced scope in managed services contract

› North East Asia (-3% YoY)

– Mainland China decline partly offset by growth in

Japan and Korea

› South East Asia, Oceania and India (flat YoY)

– Continued mobile broadband investments in South

East Asia offset decline in services

– Operator consolidations in India

› Other (flat YoY)

– IPR revenues SEK 2.0 (2.2) b.

Q2 Market Area sales

18.5%

13%

27%

29%

12.5%

16Q2 Europe &Latin

America

MiddleEast &Africa

NorthAmerica

NorthEast Asia

SE AsiaOceania &

India

Other 17Q2

SEK 54.1 b.

SEK 49.9 b.

-11%

-17%

-7%

-3% 0% 0%

YoY

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› Sales adj. for FX -14% YoY ‒ Lower mobile broadband investments

‒ Reduced scope in MS contract

› Op margin 10% (13%) ‒ Lower sales and gross margins

› Focused Radio R&D investments

started

› Ericsson Radio System tracking

towards 100% of deliveries in 2018 ‒ 49% of deliveries YTD

› Sales adj. for FX -11% YoY ‒ Lower legacy products sales

› Op income SEK -0.8 (-0.4) b. ‒ Lower sales

‒ Sequential margin improvement, partly

from cost reductions

‒ Negative impact on OI from net cap dev

expenses, SEK -0.2 b. YoY

› Exploring strategic opportunities

› Sales adj. for FX -10% YoY ‒ Lower legacy product sales

› Op income SEK -2.4 (-1.1) b. ‒ Lower gross margin

‒ Negative impact from net cap dev

expenses, SEK -0.8 b. YoY

› Turn around plan ‒ Stability: Roadmaps, underperforming

projects and scoping

‒ Profitability: Delivery efficiency, R&D

efficiency, reduced G&A

‒ Growth: Scale new SW platforms

Tangible improvements expected 2018

Segment summary

SEK b. 17Q2 16Q2 17Q1

Sales 36.8 40.2 36.2

GM 30% 32% 31%

Op. income 3.5 5.3 4.3

OM 10% 13% 12%

Networks IT & Cloud Other

Numbers exclude provisions, write-downs and restructuring charges in 17Q1. 16Q2 and 17Q2 exclude restructuring.

SEK b. 17Q2 16Q2 17Q1

Sales 10.9 11.5 9.6

GM 28% 36% 28%

Op. income -2.4 -1.1 -2.2

OM -22% -9% -23%

SEK b. 17Q2 16Q2 17Q1

Sales 2.2 2.4 2.0

GM 37% 39% 31%

Op. income -0.8 -0.4 -1.0

OM -38% -17% -51%

Carl Mellander Chief Financial Officer

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34% 33%

29% 29%

31% 30%

25%

30%

35%

40%

Q12016

Q2 Q3 Q4 Q12017

Q2

Gross margin

› As anticipated, gross margin declined QoQ following

seasonally stronger software sales in Q1

› YoY gross margin negatively impacted by lower

Networks software sales and by reduced margins in IT

& Cloud

› Un-seasonally strong software sales in the second

quarter last year

› Some negative impact from lower IPR revenues YoY

We will accelerate actions to reduce costs and increase efficiency

17Q1 excludes provisions, write-downs and restructuring charges. Other quarters exclude restructuring.

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3,8

0,3

Q216 excl restructuring

Hedgeimpact

Capitalized R&D Volume Grossmargin

R&Dexpenses

SG&AExpenses

Q217 exclrestructuring

Operating income Q2 YoY

SEK b.

OM 7%

Lower sales, reduced gross margin and less capitalization of R&D main drivers for reduced result

OM 1%

Sales -8% YoY

Gross margin

from 33% to 30%

Hedge loss of

SEK -0.5 b.

in Q216

Hedge gain Q217

SEK 0.5 b.

reported as

financial net

Net impact

Q216 +0.7

Q217 -0.4

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› YoY negatively impacted by FX, appr -2%

› Significant impact from less capitalization of R&D – Driven by focused strategy, technology and portfolio shifts

– No cash impact

› SG&A

– YoY reduced, despite negative FX impact

› R&D – YoY increase with higher investments in Networks

– QoQ increase mainly due to seasonality

– SEK 1.1 b. negative impact from capitalized development

expenses YoY

› Will implement cost savings with an annual run

rate effect of at least SEK 10 b. by mid-2018

* Net of: capitalized and depreciated development expenses, and amortized intangible assets.

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

6,7 6,7 6,6

7,7 7,1 7,9

-0,5 -0,2

0,4

Q216 Q117** Q217

Operating expenses excl. restr., SEK b.

SG&A underlying R&D underlying Other*

Operating expenses

14.0 13.7

14.8

** 17Q1 exclude provisions, write-downs and restructuring charges. Other quarters exclude restructuring.

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SEK 10 b cost reductions

› At least SEK 10 b. net reduction of annual run rate by

mid 2018

– 50% common costs, 50% service delivery

– Baseline: Current run rate, i.e. annualized Q2 2017

› Reductions in addition to – Supply, i.e. closing manufacturing sites

– Rightsizing due to lower business volumes

– Other strategic opportunities

› Restructuring charges

– 2017 estimated in the higher end of the range SEK 6-8 b.

– 2018 restructuring charges to be communicated

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65,6

-0.8 +1.9 -1.1 -1.0 -0.8

-5.6 -3.3 -0.6

54,3

Gross cash1703A

Net Incomereconciled to

cash

Change Netoperating

assets

Restructuring CAPEX Acquisitions,divestments &

Other

Otherfinancingactivities

Dividend FX on cash Gross cash1706A

Change in gross cash SEK -11.3 b.

Change in Gross cash Q2

Repayment of Eurobond, SEK 5.1 b.

Investing1

-1.8 b

Financing

-8.9 b

FX on cash

-0.6 bb

Operating cash flow

0.0 b

Change in net cash SEK -4.3 b. 1) Excluding Interest-bearing securities

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› Increased risk of market and customer project adjustments

– Focused strategy, current market and company position continued risk assessment

– Estimated negative impact on operating income of SEK 3-5 b. in the coming 12 months • 30% estimated to impact cash

• Payment risks, challenging projects, exit costs

• Estimated to impact all business segments

› Reducing capitalization

– Due to technology & portfolio shifts

– Reducing capitalization of product platform R&D, software release R&D and hardware costs

– Together resulting in net negative impact on operating income of SEK -2.9 (1.3) b. in 2H17,

with no impact on cash

• Total impact on operating income in Q2 was SEK -0.3 (1.2) b.

Additional project risks reducing capitalization

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1. Product platform R&D capitalization

– Example: The new OSS and BSS platforms

– Product platform R&D is capitalized and depreciated over 24-36 months as R&D expenses

– Capitalization is reduced as a consequence of; cyclical product platform development and the focused business

strategy

2. Software release R&D capitalization

– Example: Expenses related to radio software releases 16A and 16B

– Certain R&D expenses, related to specific software releases, are capitalized as inventories and depreciated as cost of

sales over 6 months

– No longer relevant due to more continuous deployment and a differentiated release pace between different

technologies

3. Hardware cost capitalization

– Example: Parts of the Radio portfolio

– A portion of the up-front hardware cost is capitalized as inventories and depreciated over 24 months as cost of sales to

match revenue with cost

– Capitalization levels are adapted to fit the new portfolio, driven by technology and product development, with the

introduction of the Ericsson Radio System

Reducing capitalization – background

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Market related

› RAN equipment market outlook for 2017 estimated at high single-digit percent. Previous estimate: -2% to -6%.

Ericsson focused strategy related

› Addressing low-performing operations in MS and optimizing NRO offering expected to reduce FY19 sales up to SEK 10 b.

› Cost reductions with annual run rate of at least SEK 10 b. by mid-2018, split 50/50 between service delivery and common costs

› The company aims to increase R&D efficiency. However, R&D expenses will increase short term, primarily in Networks

› Less capitalization is expected to result in a net negative impact on operating income of SEK -2.9 (1.3) b. in second half 2017,

with no impact on cash.

› Restructuring charges for 2017 are estimated to be in the higher end of the range of SEK 6-8 b.

› Increased risk of further market and customer project adjustments, with a negative impact on results, estimated to SEK 3-5 b. for

the coming 12 months, of which 30% is estimated to impact cash

Other Ericsson related

› The earlier communicated rescoped managed services contract in North America will impact sales negatively YoY in Q3 2017

› Industry trends and business mix in mobile broadband in 2016 are expected to prevail in 2017

Planning assumptions From the Q2 report

Based on current visibility, assessments and FX rates

This presentation contains forward-looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read our earnings reports and our most recent annual report for a better understanding of these risks and uncertainties.

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cash flow impact

Activity Total cost

SEK b.

Cash impact

SEK b.

Timing

2016 restructuring charges, balance Dec 31 2016 3 3 2017

2017 restructuring charges 6-8 6-8 50% 2017

50% 2018

Q1 2017 provisions and customer project

adjustments

8.4 5.8 Over several

years

Customer and market risks identified in Q2 2017 3-5 30% Over several

years

2018 restructuring charges To be confirmed To be confirmed 2018-2019

Börje Ekholm President and CEO

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› Plan in place – execution started

› Strong commitment across

organization

› Positive response from customers

Focused strategy

At least double the 2016 operating margin, excluding restructuring charges, beyond 2018

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Documents

first QUARTER 2017–Baseline: Current run rate, i.e. annualized Q2 2017 ›Reductions in addition to Supply, i.e. closing manufacturing sites –Rightsizing due to lower business