Swedish telecom giant Ericsson steps up savings plan

STOCKHOLM (AFP): Swedish telecommunications giant Ericsson said Tuesday that it is stepping up its cost-cutting program as it expects a “choppy environment” this year after profits fell in the first quarter.

The telecom equipment maker will now reduce costs by 11 billion Swedish kronor ($1.1 billion) in 2023, saying it found an additional 2 billion kronor in savings.

Ericsson announced in February that it would slash 8,500 jobs worldwide, or 8% of its workforce.

The Swedish group is locked in a battle with Finnish rival Nokia and China’s Huawei for 5G networks. Still, it noted that its customers – mobile operators – have slowed the deployment of such equipment.

“We continue to see a choppy environment during 2023 with poor visibility,” Ericsson said in its quarterly earnings statement.

Ericsson’s net profit fell 46% to 1.6 billion kronor in the January-to-March period.

Sales rose 14% but were flat when adjusting figures to account for currency exchanges and other parameters.

Ericsson said it expects customers “to remain cautious” with investments and continue to adjust their inventories in the second quarter.

“We expect the slower growth we saw in Q1 (the first quarter), caused by the slower global economy, to continue in Q2,” Ericsson added.

Graft allegations in Iraq have also shaken shareholder confidence in the company.

Ericsson said last month that it would pay a $207 million fine for breaching a deal with U.S. authorities by not disclosing an investigation of suspected bribes to the Islamic State group in Iraq.