Ericsson’s sales in Southeast Asia, Oceania, India falls 44% YoY on Jio, Airtel 5G capex slowdown, ET Telecom

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FILE PHOTO: An Ericsson logo is pictured at Mobile World Congress (MWC) in Shanghai, China June 28, 2019. REUTERS/Aly Song/File PhotoNEW DELHI: Stockholm-headquartered telecom gear maker Ericsson on Friday reported a 44% year-over-year decline in sales in Q2 2024 in the market area Southeast Asia, Oceania, and India, primarily due to lower capital expenditure (capex) by Reliance Jio and Bharti Airtel. Ericsson’s sales in Southeast Asia, Oceania, and India slid to 7.7 billion crowns in Q2 2024, compared to 13.8 billion crowns in the same quarter a year ago. Sequentially, the vendor’s net sales in this region were down by 10%. “Sales decreased by -44% YoY. Networks sales declined primarily in India as investment levels have normalised after a record year in 2023,” Ericsson said in its earnings report.

The slowdown in spending on 5G equipment by India’s largest telcos Jio and Airtel has been weighing down on Ericsson and its Finnish rival Nokia, after a record pace of deployments of fifth-generation networks last year. Consequently, both vendors have slashed thousands of job in an attempt to save costs.

To be sure, both Jio and Airtel have completed their pan-India 5G deployments. Third-ranked Vodafone Idea (Vi), meanwhile, has only fulfilled its 5G minimum rollout requirements.

Vi has stated that it is in discussions with Ericsson and other vendors for buying 5G gear. In June, Ericsson India entered into an agreement with Vi to settle outstanding dues, and take an equity stake in the telco.

As per the earning report, the impact of the transaction is expected to be recognised in Ericsson’s Q3 results. The shares will be subject to a six-month lock-up period.

Ericsson’s net sales group-wide fell by 7% year-over-year to 59.8 billion crowns, which it attributed to the reduced telco investment levels across most geographies, and an 11% decrease in the mobile networks business, “as a return to growth in North America was more than offset by lower customer investment levels, primarily in India, after record investment levels in 2023”.

“In Q2, we maintained our leading market position, returned to growth in North America, and delivered strong gross margin expansion and free cash flow. We remained focused on matters in our control, to optimize our business amid a challenging market environment, with industry investment levels unsustainably low,” said Börje Ekholm, President and CEO of Ericsson.

“Our results highlight our competitiveness, and we will continue to take proactive steps to position the business for longer-term success. We expect market conditions to remain challenging this year, as the pace of India investments slow, however our sales will benefit during the second half from contract deliveries in North America,” Ekholm said.

Published On Jul 12, 2024 at 04:41 PM IST

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Ericsson’s sales in Southeast Asia, Oceania, India falls 44% YoY on Jio, Airtel 5G capex slowdown, ET Telecom

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