AT&T’s five-year deal with Ericsson and a spike in 5G investment in India were bright spots in an otherwise contracting market
With the exception of a major five-year deal with AT&T and a spending spike in India, Ericsson CEO Börje Ekholm described a “difficult mobile networks market marked by persistent headwinds” in reporting fourth quarter and full year 2023 financials. He called the slowdown in North American spending “unprecedented.” Ekholm also acknowledged a spike in sales into India as carriers there rapidly deploy 5G but, he said, that business would call off as “the investment pace normalizes.”
Fourth quarter sales declined 17% year-over-year with a 23% decline in the networks business. Gross income decreased to around $2.8 billion from $3.4 billion in the same quarter last year.
Ekholm said Ericsson has engaged in a multi-faceted cost-cutting program, including a reduction of 9,000 headcount that started last year and will continue in 2024. This, he said, is among the “critical steps in building a stronger, more profitable Ericsson.”
The big picture, Ekholm said, is to continue to deliver high performance, differentiated, open mobile networking technologies. Historically, he said large declines in the mobile market are followed by a rebound. “That is something we see will happen this time as well,” although the timing is difficult to predict.
He said operators are having to deal with stagnant return on capital. “I think to change this there are two things we can do: We can passively wait for the market ot just improve or regulation to change, or we try to address the issue head-on by changing the way networks are consumed and monetized…We’ve chosen the latter route.”
“Ultimately we expect the market to recover to more normalized levels, but that will be over time,” Ekholm said. “It’s really up to our customers to determine the cadence of investment and really not up to us to predict when the market will turn.”
