Ericsson AB reported lower-than-expected earnings for the fourth quarter, as anticipated growth in Indian sales failed to materialise. The Swedish telecom equipment giant saw adjusted earnings before interest and taxes rise 33% year-on-year to 9.8 billion Swedish kronor (£714 million), falling short of analysts’ forecasts of 10.3 billion kronor. The adjusted operating margin also lagged expectations, reaching 13.4% versus a projected 14.03%.
The global market for telecom equipment remains challenging, with operators deferring costly network upgrades, impacting companies like Ericsson and its Nordic rival Nokia Oyj. In response, Ericsson has focused on cost-cutting and expansion in key markets such as the United States and India. Despite these efforts, its shares dropped over 9% in early Stockholm trading, marking the steepest intraday decline since mid-2023.
Sales in North America provided a bright spot for Ericsson, climbing 54% on an adjusted basis, bolstered by a $14 billion contract with AT&T Inc. Revenue in Europe and Latin America also improved, but this growth was overshadowed by a sharp decline in Indian revenue. Following a large-scale 5G rollout in 2022, investments by Indian operators Bharti Airtel and Vodafone Idea slowed considerably, dampening expectations.
Ericsson anticipates a rebound in Indian sales as operators boost spending on 5G infrastructure. However, deliveries under a new Vodafone Idea contract are yet to commence, and the company’s Chief Financial Officer, Lars Sandström, described the market as “stabilising” but not showing significant recovery. Elsewhere, Europe is seeing gradual improvement after years of stagnation. Ericsson recently secured a contract to build an OpenRAN-compliant network for Spain’s Masorange, although the region remains hampered by regulatory constraints. CEO Börje Ekholm has criticised Europe’s bureaucratic hurdles, contrasting the continent’s crowded and regulated market with more dynamic environments in the US and China.
As the global Radio Access Network market stabilises, Ericsson remains optimistic about growth in key regions. However, its long-term outlook remains subdued, underscoring the ongoing challenges facing the telecom equipment industry.
