Ericsson India sales up nearly four times in July-September
While global communications service provider Ericsson reported an overall weak earnings performance in the July-September quarter, the company in India witnessed nearly a fourfold increase in sales year-on-year (y-o-y). Ericsson’s India sales in the quarter rose to 9.6 billion Swedish crowns ($880 million) from 2.7 billion Swedish crowns ($248 million), according to the company’s earnings.
The reason for the strong growth in India can be attributed to sales of telecom equipment due to the continued deployment of the 5G network by Airtel and Jio. In other markets like the US, telecom operators have lowered the pace of 5G network deployment and continue to maintain higher inventory of network equipment, which has affected Ericsson’s sales in these regions.
India is now the second biggest market for Ericsson with a 15% market share, compared to the US which continues to be the largest market for the company with a share of 31%.
However, last year India contributed only 4% to Ericsson’s revenue, while the USA contributed about 44%.
In India, the company is supplying network equipment such as 5G Radio Access Network (RAN) to telecom operators Reliance Jio and Bharti Airtel. Concerning the 5G network rollout, the company is ramping up its production with its contract manufacturing partner Jabil in Pune. Ericsson is also bullish on the opportunity of fixed wireless access (FWA) in India.
In the July-September quarter, Ericsson’s total sales fell 10% y-o-y to 64.5 billion Swedish crowns ($6.3 billion). In the combined Southeast Asia, Oceania and India, Ericsson’s revenue grew 74% y-o-y to 13.8 billion Swedish crowns ($1.35 billion). In other markets such as North America, Northeast Asia, the company’s sales fell by 49% and 4%, respectively.
In markets such as Europe and Latin America, and West Asia and Africa, the company’s revenue grew 1% and 14%, respectively.
Ericsson also reported a net loss of Swedish crowns 30.5 billion ($2.8 billion), compared to profit of Swedish crowns 5.4 billion in the year-ago period.
Due to lower capital expenditure by telecom operators in major markets except India, Ericsson’s gross margins in July-September dropped to 38.4% from 41.4% in the same period in 2022.
“In a challenging operating environment, Ericsson delivered third quarter results in line with our guidance. Consistent with the rest of our industry, we expect the macroeconomic uncertainty to persist into 2024, which impacts our customers’ investment ability,” Ekholm said.
“For Q4 we expect similar market trends as in Q3, while the cost-out impact will increase,” Ekholm added.
The company said that, given the current uncertainty, it will not provide guidance beyond Q4, 2023. “As the timing for the market mix recovery is in our customers’ hands, we prudently plan for current market conditions to prevail into 2024,” Ekholm said.