The vendor expects the decline in 5G demand will continue from last year
Sweden’s Ericsson says it expects a further decline in 5G equipment sales to mobile operators in the coming year, despite the company beating its Q4 profit expectations this week.
Sales are slowing in both the US and India – a concerning trend given the latter is typically classed as a high growth market and still has a long way to go with its 5G rollout.
In Q4, revenues dropped 16% year-on-year to SEK 71.9 billion ($6.9 billion), compared to a 5% drop in Q3. Net income fell 30.5% to SEK3.4 billion ($323.7 million).
“As we look to 2024, we expect the market outside China to further decline, with similar uncertainties as experienced in 2023,” said President and CEO Börje Ekholm in the results’ press release.
“We expect a… a further decline of the RAN [Radio Access Network] market outside China as our customers remain cautious and the investment pace is normalizing in India,” continued the press release.
“5G only being in the early stages of build-out will require additional network investments. In our view, the current investment levels are unsustainably low for many operators.”
To combat the decline in revenues, Ericsson has confirmed that it will continue to focus on cost efficiency and operational efficiency in the coming year, which could include layoffs, reports Reuters. The company already announced that 8,500 job will be cut between the middle of 2023 and end of 2024.
Despite the forecast decline, Ericsson is expected to get a boost from the $14 billion from its deal with AT&T in the second half of this year. This deal was signed back in December and will see Ericsson supply the Open RAN equipment to the US telecoms giant, which hopes the open technology will carry 70% of its wireless traffic by the end of 2026.
In a separate press release today, the company announced that it has appointed Lars Sandström as Chief Financial Officer, replacing Carl Mellander, who announced his departure in April.
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