How will the cash proceeds from the iconectiv sale affect Ericsson's balance sheet and dividend policy?

Balance‑sheet impact

The completion of the iconectiv sale injects a sizable, tax‑adjusted cash benefit into Ericsson’s treasury. By converting a non‑core asset into liquid capital, the company’s cash‑and‑cash‑equivalents line will rise sharply while the “Investments in subsidiaries” line will fall, resulting in a higher net‑cash position and a stronger equity‑to‑debt ratio. The extra liquidity also gives Ericsson more headroom to fund its 5G roll‑out, cap‑ex and R&D programmes without resorting to external borrowing, which should tighten the balance‑sheet leverage metrics that many credit‑rating agencies still watch closely.

Dividend‑policy implications

Historically, Ericsson has used surplus cash to sustain a dividend that averages roughly 3–4 % of the share price. The new cash inflow improves the free‑cash‑flow coverage of the payout and reduces the risk of a dividend cut, especially if the 2025 earnings come in line with consensus. Management may therefore keep the current payout ratio, or even modestly lift the per‑share dividend, to signal confidence and reward shareholders after the divestiture. Until the next quarterly results or a formal dividend announcement, the market will price in a “dividend‑support” premium, which can be captured on any pull‑back.

Trading take‑away

The news is likely to have already baked into the price, but the balance‑sheet upgrade and the prospect of a stable or slightly higher dividend create a bullish backdrop. Look for the stock to find support around the recent low‑volatility zone (≈ SEK 180) and, if it holds, consider a short‑term long position with a stop just below the next technical trough (≈ SEK 175). A breakout above the short‑term resistance (≈ SEK 190) could trigger a rally, especially if the dividend policy is confirmed in the upcoming Q3 release. Keep an eye on the dividend declaration date (usually late Q3) for a potential catalyst.