Ericsson expects RAN market to contract in 2024 as investment pace normalising in India: Borje Ekholm

Swedish telecom gear maker Ericsson expects the radio access network (RAN) market to contract in 2024, primarily due to the decline in India following the record build-out of fifth-generation networks by Reliance Jio and Bharti Airtel, and cautious capex investments by customers.

“The mobile network industry remains challenging. We expect the current market uncertainties to prevail into 2024 with a further decline of the RAN market outside China as our customers remain cautious and the investment pace is normalizing in India. The new US contract will start to ramp up in the second half of 2024,” Borje Ekholm, President and CEO of Ericsson said in the earnings report.

The new contract refers to Ericsson’s deal with AT&T to commercially build an Open Radio Access Network (Open RAN) technology-based network in the United State which will carry 70% of the telco’s network by late 2026.

AT&T’s spending could approach roughly $14 billion over the contract duration, Ericsson said in a joint statement. AT&T expects to have fully integrated open RAN sites operating in coordination with Ericsson and Fujitsu, starting in 2024.

Ekholm said the current investment levels are “unsustainably low” for many telecom operators, but the company is confident of a recovery. “However, the timing of market recovery is ultimately in the hands of our customers,” he said.

Ericsson’s Mobile Networks segment sales in the market area of South East Asia, Oceania and India grew by 7% year-over-year, while sales in India grew by 14% year-over-year in Q4 2023, as per its report.

Sequentially, sales in India declined by almost -40%, due to a slowdown in capex investments. “A reduction in capex investments in India was expected in the beginning of 2024 but occurred earlier than anticipated,” the vendor said.

“Sales in Q4 2022 was positively impacted by retroactive IPR licensing revenues for unlicensed periods in 2022. Reported sales decreased by -23%,” Ericsson said.

For the full-year 2023, the company’s reported Mobile Networks sales decreased by -11% in 2023 to 171.4 Swedish Krona, compared to 193.5 Swedish Krona in 2022.

Its sales growth in the market area of South East Asia, Oceania and India was 82%, driven by 5G contracts in India. Sales in the market area of Middle East and Africa grew by 10%.

“Market area North America reported a sales decline of -46% as operators reduced capex investments after record-high investments in 2021 and 2022. Sales adjusted for comparable units and currency decreased by -15%,” Ericsson said.

Kiran Thomas, the President of Reliance Jio Infocomm, recently said that the telecom operator has completed its pan-India 5G deployment ahead of the planned schedule, and its fifth-generation mobile network is serving 90 million customers. Rival Bharti Airtel is also expected to complete the deployment of its 5G network soon.

“I’m glad to say that overall Jio has completed the True 5G network rollout as promised well ahead of the schedule of this-pan India deployment,” Thomas said.