Ericsson warned of an uncertain environment during 2023 with operators in established markets remaining cautious on capex, although its revenue in Q1 was boosted by equipment sales in emerging 5G markets including India.

The Swedish vendor described 2023 as choppy with poor visibility, but predicted a gradual recovery in the second half as inventory adjustments are completed and cost reduction activities start flowing through the P&L.

Ericsson increased its cost-reduction target by SEK2 billion ($194.2 million), now expecting to hit SEK11 billion in savings by the end of 2023.

However, after announcing plans in February to lay-off 8,500 employees including 1,400 in its home market, EVP and head of business area Networks Fredrik Jejdling told Mobile World Live the increased savings target would not mean more staff cuts.

Ericsson also expects operators to invest in networks later in the year “to avoid deteriorating quality” as they see underlying traffic growth.

Business mix shift
The vendor reported net sales of SEK62.6 billion in Q1, up 14 per cent year-on-year from SEK55.1 billion.

Net income fell 46 per cent to SEK1.6 billion as a result of restructuring costs: Jejdling added it was largely linked to “the business mix shift”.

Sales from Networks segment grew 4 per cent to SEK42.5 billion and accounted for 68 per cent of total revenue.

India was highlighted as a particularly strong 5G sales generator, with revenue from the country along with South East Asia and Oceania up 138 per cent to SEK13.9 billion.

This was offset by a drop in established markets including North America, which slipped 18 per cent to SEK16.9 billion, and a 7 per cent decline in Europe and Latin America to SEK14.2 billion.

Jejdling explained following record levels of 5G investment in the US in 2022, a drop in the market was expected and operators in the country had “shelved quite a bit of inventory”.

He explained Ericsson expects further gains in countries like India this year, which are earlier on in their 5G journey.

Enterprise segment revenue rose 275 per cent to SEK6 billion due to the inclusion of reported sales from its completed Vonage acquisition.

Cloud Software and Services rose 11 per cent to SEK13.4 billion.

CFO exit
Along with the financials, Ericsson announced CFO Carl Mellander will step down at the end of Q1 2024, following a 25-year stint at the company and more than seven years on the executive team.

CEO Borje Ekholm said there was a mutual agreement on both sides “that this is a good time for change”, after Mellander’s “instrumental” role in helping to turn around Ericsson’s fortunes.