Ericsson expects market conditions to remain challenging this year as the pace of network-related investments in India slows down, said Börje Ekholm, President and CEO.
The company anticipates that the impact of the Vodafone Idea transaction, in which it took an equity stake to settle outstanding accounts receivables, will be recognized in the third quarter.
In June 2024, both companies agreed to settle the outstanding accounts receivables. Vodafone Idea shareholders approved this transaction at a July 10, 2024 meeting.
Ericsson said the shares will be subject to a six-month lock-up period.
“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 slows, however, our sales will benefit during the second half from contract deliveries in North America,” he added.
The Swedish telecom gear maker reported a 44 percent year-on-year decline in sales for the April-June quarter in the Southeast Asia, Oceania, and India market region. This decline was primarily due to the significant reduction in operator capex investments in India following a year of record-high investment levels in 2023.
The region reported SEK 7.7 billion in the second quarter, compared to SEK 13.8 billion in the same period a year earlier.
Ericsson reported that net sales were down 10 percent sequentially for the market region.
The company said network sales declined primarily in India as investment levels have normalized after a record year in 2023.
India’s contribution towards Ericsson’s global sales has also decreased drastically from 14 percent in 2023 to six percent in the second quarter of 2024.
Ericsson, a supplier of 5G equipment to Reliance Jio and Bharti Airtel, is experiencing a slowdown in India. This comes as Jio and Airtel have completed their pan-India 5G deployments, impacting Ericsson and its Finnish competitor Nokia.
The Swedish gearmaker is in talks to secure fresh 4G and 5G equipment orders from Vodafone Idea, which will kick off a network expansion exercise following a successful follow-on offer in the coming months.
Ericsson’s global sales declined 7 percent to SEK 59.8 billion, reflecting reduced operator investment levels across most geographies. The sales decline was due to an 11 percent decrease in the 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.
It added that organic sales were stable in Cloud Software and Services and Enterprise.
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