New Delhi: Swedish telecom gear maker Ericsson reported a 74% surge in its sales from the South East Asia, Oceania, and India regions to SEK 13.8 billion ($1.26 billion) in the quarter ended September, primarily driven by 5G market share gains in India, the company said in a statement on Tuesday.
The growth seen in the Indian markets was able to partly offset the massive decline in revenues from the North American market which saw network sales drop by 60% in the quarter versus a record quarter the same period in 2022.
“Q3 performance was in line with guidance, with an EBITA margin of 7.3% and an EBITA of SEK 4.7 billion. Group organic sales declined by 10%, with a 16% organic decline in networks partly offset by 5% organic growth in cloud software and services and 11% in enterprise,” said Ericsson president and chief executive officer Börje Ekholm.
“Networks organic sales in North America were down by 60% YoY from a record quarter in Q3 2022, due to customers‘ inventory adjustments and a slower deployment pace. Sequentially, networks sales declined by -2% in line with previous trends. The decline in North America was partly offset by growth in India as well as some early 5G markets resuming investments,” he added.
India remains the second largest market for Ericsson as a percentage of net sales after the US, but strengthened its share to 15% as of September 2023, much larger than the 4% share it had in the same period in 2022. China and the UK have a 4% share each while Japan has a 3% share in the 2023 quarter.
Net sales for the group stood at SEK 64.5 billion for the quarter, lower by 5% on-year, the company said in its quarterly results. “It is expected that the seasonality between Q3 and Q4 will be somewhat less than normal, mainly due to sequentially flat sales in India,” the company added.
Ekhholm noted that free cash flow before M&A had lowered to SEK 0.5 billion mainly due to increased working capital for the large deployment projects such as in India, and added that in 2024, the build-out pace in these projects should reduce which is expected to tapering of working capital and free cash flow, to start gradually approaching the long-term target of 9-12% of net sales.
India’s two largest carriers Reliance Jio and Bharti Airtel have used network gear of providers including Ericsson and Nokia to deploy more than 270,000 5G sites across the country in what is being considered as one of the fastest 5G rollouts globally and the third largest 5G deployment in the world. The carriers have invested billions into the fast-paced rollout by substantially advancing capex since October last year, however, the pace is likely to moderate from FY25 since both carriers would have completed their pan-India urban 5G coverage.
Ericsson also said that Nunzio Mirtillo, senior vice president and head of market area for South East Asia, Oceania & India, will retire during 2024, and processes to appoint his successor have been initiated.
Meanwhile, in its legal disclosures, Ericsson said that as part of its defense to a now settled patent infringement lawsuit it filed in 2013 in the Delhi High Court against Indian handset company Micromax, the latter has filed a complaint against Ericsson with the Competition Commission of India (CCI). The CCI decided to refer the case to the Director General’s Office for an in-depth investigation. The CCI opened similar investigations against Ericsson in January 2014 based on claims made by Intex Technologies (India) Limited and, in 2015, based on a now-settled claim from iBall.
“Ericsson has challenged CCI’s jurisdiction in these cases before the Delhi High Court. On July 13 2023, the Division Bench of the Delhi High Court found that in this instance the CCI has no power to conduct the pending investigations against Ericsson. This order may be further appealed to the Supreme Court by the CCI (which has an initial 90-day period to appeal subject to further extensions which can be granted by the Court),” it added.
Source : Mint