Ericsson could be forced to slash a quarter of its workforce in Italy, equating to 1,000 jobs, after missing out on a €1 billion contract to upgrade the network of the country’s recently created joint venture between Wind and 3 Italia.
Sources told Bloomberg the struggling Swedish vendor had not been selected by CK Hutchison and VimpelCom, the respective owners of 3 Italia and Wind, and the staff reductions will come as a result of missing out on the contract.
Earlier this week Reuters reported China’s ZTE received notification it had won the order in Italy, although there is still no official confirmation.
Huawei and Nokia were also in contention, Bloomberg reported.
3 Italia and Wind closed a deal to merge their local units in Italy in November, after a rigorous European Commission approval process, in a tie-up that creates the country’s largest operator. The companies aim to launch joint services in January.
More pressure for incoming CEO
For Ericsson the loss of a major services contract in Europe is a blow, particularly as it already holds managed services contracts with Hutchison and Wind, a Bloomberg source said.
The company announced in October it would slash 3,000 jobs in its domestic market following months of speculation and a series of poor financial results, which contributed to the departure of long-time CEO Hans Vestberg in July.
Earlier this month the company announced its job cuts plan was ahead of schedule, with 1,600 employees set to take its redundancy package at the end of the year.
Missing out on the contract in Italy will also increase the pressure on incoming CEO Borje Ekholm, who is set to take the helm in January.
Ekholm will be tasked with finding a way to revive the company’s fortunes amid an industry slump as operators curb investments in infrastructure.