European telecom gear makers Nokia and Ericsson have reported a steep decline in sales in the January-March period as Indian telecom operators "normalised" the 5G deployment pace.
Nokia on April 18 reported a 68 percent decline in net sales to 265 million euros in the January-March quarter, compared to 853 million euros in the same quarter last year, as Indian telecom operators "normalised” the 5G deployment pace.
Pekka Lundmark, President and CEO of Nokia, said that a slower pace of spending in India was anticipated following the rapid 5G deployment seen in H1 2023. “...our expectations for India for the full year remain unchanged.”
In the APAC, India's net sales declined, reflecting the normalisation of 5G investments in the region after significant deployments in the year-ago quarter, Nokia said in its Q1 earnings report. “Elsewhere in APAC, the Rest of APAC and Greater China also declined.”
Nokia’s rival Ericsson also posted a 38 percent year-over-year fall in net sales in its Southeast Asia, Oceania, and India market area, from 13.9 billion SEK in Q1 2023 to 8.6 billion SEK in Q1 2024.
Ericsson's sales declined in India after a record 2023 "as the market started transitioning to more normalised investment levels," the Swedish vendor said in its earnings.
Nokia and Ericsson's first-quarter earnings mark a net sales drop for the second straight quarter in India.
Until the July-September quarter of 2023, both vendors were experiencing record sales from their India operations.
“We expect a further decline in the RAN (radio access network) market, at least through the end of this year, as customers remain cautious with their investments and the pace of investment in India continues to normalise,” said Börje Ekholm, president and CEO, Ericsson in the earnings statement.
In a recent interaction with Moneycontrol, Ekholm said that the build-out of 5G in India was unprecedented compared to anywhere else in the world. The deployment pace would normalise after a few quarters.
In India, both vendors supply network equipment, such as 5G Radio Access Network (RAN), to telecom operators Reliance Jio and Bharti Airtel.
Focus on Vodafone Idea
Both European vendors expect fresh deals from struggling telco Vodafone Idea, which has earmarked Rs 12,750 crore of the total FPO proceeds to purchase equipment for expanding its network infrastructure by setting up new 4G sites, expanding the capacity of existing 4G sites and new 5G sites.
Vodafone Idea will spend Rs 5,720 crore of the Rs 12,750 crore earmarked for network expansion on setting up its 5G network, as per the RHP.
Vodafone Idea has over 200 million subscribers and currently works with Nokia, Ericsson, Huawei and ZTE for its 4G network. Nokia powers Vodafone Idea’s 4G in nine circles, while Ericsson does so in eight circles. Chinese companies Huawei and ZTE power the telco’s 4G in seven and five circles, respectively.
Vodafone Idea's management said on April 15 that it intends to cover 40 percent of its revenue base with its 5G services in the next 24-30 months. It added that 5G network order placement will start once it secures funding.
The telco, which aims to focus network investment to drive coverage and capacity expansion in 17 priority circles in the country, expects to roll out 5G services in select pockets within 6-9 months of the issue.
Akshaya Moondra, Vodafone Idea's chief executive officer, told Moneycontrol on April 17 that the telco has been engaged with all 5G telecom gear vendors for some time and that order placement will depend on how early it secures funding for capex. “As we invest in 4G growth and capacity and 5G rollout, we will be able to participate in the industry's growth."
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