Ericsson’s outlook for 2024 clouded by economic uncertainty

Ericsson CEO Borje Ekholm has warned that macroeconomic uncertainty will continue into 2024, impacting customers’ investment ability.

This is after the company in its recent financial statement, announced a net loss of SEK30.5 billion ($2.8 billion) for the second quarter of 2023, due primarily to a SEK32 billion impairment charge related to its acquisition of Vonage. Excluding the impairment charge, net income for the quarter would have been SEK1.4 billion.

Amid the ongoing economic uncertainty, Ericsson said it expects similar trends in the fourth quarter of 2023 as it saw in the third quarter. The company is taking measures to address these challenges, including cost management and operational efficiency improvements. The company is repositioning its business by focusing on network leadership and enterprise growth.

Despite a 60 per cent drop in organic network sales in North America due to inventory adjustments and slower deployment, Ericsson reported that this was offset by the resumption of investment in India and some early 5G markets.

Fredrik Jejdling, EVP and head of Networks,Ericsson,  told online communications hub for the global mobile industry Mobile World Live that the company is unwilling to predict when a recovery will occur, but reiterated its long-term EBITDA margin target of 15 per cent to 18 per cent and said it is seeing underlying drivers that will lead to a recovery, but that the timing will depend on the market mix.

According to Jedjling, the recovery of the network industry will depend on several factors, including the growth of data and the need for customers to increase capacity, as well as the creation of a revenue platform or “revenue economy” through network APIs to support a sustainable business model for 5G.

Additionally, Ekholm noted that the industry is still in the early stages of 5G adoption, with 75 per cent of radio base station sites outside of China still not upgraded to support 5G mid-band.