Press Release

Ericsson Receives New 5G Contract 

Ericsson

India’s Bharti Airtel has awarded the Swedish telecom equipment manufacturer Ericsson a new, multi-billion dollar contract to market 5G equipment.

TakeAway Points:

  • Swedish telecom gear maker Ericsson  has received a new multi-billion dollar contract for selling 5G equipment from India’s Bharti Airtel.
  • The new contracts are expected to boost Ericsson’s revenue next year after seeing a big fall in contracts from India in the first half of the year.
  • Sweden’s Ericsson said the telecom equipment market is showing signs of improvement after reporting core earnings and sales above expectations, helped by a rebound in demand for 5G gear in North America.

India’s Bharti Airtel 5G contract with Ericsson

This comes after Ericsson got part of a $3.6 billion contract last month for selling 5G equipment to India’s Vodafone Idea. It shared the contract with Nokia and Samsung.

The new contracts are expected to boost Ericsson’s revenue next year after seeing a big fall in contracts from India in the first half of the year.

Sales in Southeast Asia, Oceania, and India had decreased by 44% in the second quarter. Ericsson will announce its third-quarter results on Tuesday.

Much of the deployment is likely to happen next year, according to one source familiar with the matter.

Demand from the Indian 5G market started to skyrocket in 2023, when sales from the region grew as much as five times as Airtel and Jio, the telecoms unit of Indian conglomerate Reliance Industries, started to scale up 5G services.

That demand cushioned a slowdown in revenue from Ericsson’s main U.S. market, where telecom operators have been lowering spending.

Global telecom equipment revenue dropped 16% year-over-year in the second quarter, recording a fourth consecutive quarter of double-digit contractions, according to research firm Dell’Oro.

Ericsson sees signs of stabilising market as it beats forecasts

Sweden’s Ericsson on Tuesday said the telecom equipment market is showing signs of improvement after reporting core earnings and sales above expectations, helped by a rebound in demand for 5G gear in North America.

A fall in demand from North American mobile operators in the last two years had hit companies including Ericsson and Nokia, who had to look for growth in developing markets such as India, often at the cost of sacrificing profits.

“We see signs that the overall market is stabilising with North America, as an early adopter market, returning to growth,” CEO Borje Ekholm said in a statement.

Research firm Dell’Oro estimates that the global network equipment market would decline between 8% and 10% in 2024.

Net sales declined by 4% to 61.8 billion Swedish crowns ($5.92 billion) but beat estimates of 61.6 billion. Sales in North America increased more than 50% to 20.4 billion crowns.

“North America is recovering from very low levels, with last year Q3 being our lowest quarter, so growth in percentage points has become very large, but it is also a very strong quarter,” CFO Lars Sandström said in an interview.

“When it comes to other markets, Europe is flat, and the rest are declining, so we are still in a challenging market,” he said.

Sales in Europe and Latin America were down 2%, while other markets were down in double-digit terms.

India, which was a bright spot last year, has slowed significantly. But the company has now got new contracts from Vodafone Idea and Bharti Airtel.

Changes in the geographic mix have led to a jump in adjusted gross margin to 46.3% from 39.2%.

Ericsson’s adjusted core earnings, excluding impairments, stood at 7.33 billion crowns compared with 3.9 billion crowns reported a year earlier and beat a 5.75 billion crown mean forecast in an LSEG poll of analysts.

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