Growth in India, resumption of investments in 5G help Ericsson partly offset decline in North America in Q3

The growth in India, as well as, the resumption of investments by some early 5G markets helped Ericsson partly offset the decline in North America where the Swedish telecom gear maker’s telecom customers have reduced both their roll-out pace and inventory levels.

“The decline in North America was partly offset by growth in India as well as some early 5G markets resuming investments,” Borje Ekholm, President and CEO, of Ericsson, said in the company’s earnings report.

As per the earnings report, Ericsson’s sales adjusted for comparable units and currency increased in South East Asia, Oceania and India and in the Middle East and Africa while sales declined the vendor’s other three key market areas.

In South East Asia, Oceania and India, sales adjusted for comparable units and currency increased by 74% year-over-year, driven by 5G market share gains in India. Ericsson’s sales in North America adjusted for comparable units and currency declined by 51% year-over-year.

Ericsson had bagged 5G equipment deals from India’s top two telecom operators Reliance Jio and Bharti Airtel, and is helping them roll out the fifth-generation mobile networks in the country. Nokia, Samsung, and Cisco are also working with both telcos for their 5G networks rollout.

Ericsson expects weakness in its mobile networks business to persist in 2024, as it reported a fall in demand for 5G equipment in North America.

“The mobile networks market has been flattish for two decades, but with cyclicality, and we expect that to continue,” said Ekholm. “Competitive dynamics in our customer markets tend to lead to relatively sharp increase in investments when the market turns, and we are seeing some positive signs in early 5G markets,” he added.

Networks organic sales in North America were down by 60% year-over-year in Q3 2023, due to customers‘ inventory adjustments and a slower deployment pace. North America now accounts for 23% of sales, compared to 48% earlier.

“Given current uncertainty we will not give guidance beyond Q4, 2023. As timing for the market mix recovery is in our customers’ hands, we prudently plan for current market conditions to prevail into 2024,” Ekholm said.

The vendor noted that during the first nine months of 2023, macroeconomic conditions were more challenging than expected, which has led to “reduced volumes and pace of investment by many of Ericsson’s customers, and the timing and magnitude of market recovery, particularly in North America, has been slower than expected”.

Ericsson cautioned that there can be “no assurance” as to when levels of market investment will recover.

“Traffic development on cellular networks could be further affected if more traffic is offloaded to Wi-Fi networks, which would have profound effects on operator voice/broadband/SMS revenues with possible reduced capital expenses consequences,” the company said in its earnings report.