Ericsson still offers “significant potential” despite its recent struggles, but must start to deliver on its restructuring strategy, activist investment company Cevian Capital insisted after acquiring a 5.6 per cent stake in the Swedish vendor.

According to Financial Times, the investment company spent $1 billion on the stake, and is now Ericsson’s second largest shareholder by capital, and the third biggest by votes.

Two Swedish companies, Investor and Industrivarden, have dominated Ericsson’s ownership in the past. The companies held 21.77 per cent and 15.15 per cent of Ericsson’s voting rights at end-2016.

Cevian Capital’s move comes during a turbulent time for Ericsson. Its struggles are well known, as it faces intensifying competition from major network vendor rivals including Huawei and Nokia.

Shareholders ousted long serving CEO Hans Vestberg in mid-2016, and his successor Borje Ekholm initiated a restructuring plan designed to revive Ericsson’s fortunes.

Ekholm wants to focus on Ericsson’s core networks business, improve performance in its IT and cloud unit, while cutting costs and potentially divesting its struggling media business to improve margins.

In an interview with Reuters, Cevian Capital, which is one of Europe’s biggest investment companies with a portfolio worth $15 billion, said it was behind Ekholm’s vision.

“We see a significant potential in the company,” commented Cevian Capital managing partner Christer Gardell: “It’s about hard work ahead. We support the main thrust of the plan that Borje has presented for the company, meaning an increased focus on the core business.”

Indeed, there is a long road ahead for Ericsson. In the first quarter of 2017, the vendor reported a net loss of SEK10.9 billion ($1.2 billion) compared with a profit of SEK2.1 billion in the same period of 2016, as revenue declined 11 per cent year-on-year.

Gardell, who will now join Ericsson’s nomination committee, indicated the pressure was on to deliver.

“Plans are not enough to bring success, it is how the plans are implemented. And implementation has not been Ericsson’s strength as of late.”