Ericsson 2023 Financial Report Reveals its Business Challenges in Key Telecom Markets

In a recent financial disclosure, Ericsson, a prominent telecom equipment manufacturer, has reported a notable decline in business across key telecom markets during the fourth quarter of 2023 and the full-year period. The company’s performance raises questions about the fortunes of its main competitors, including Nokia, Huawei, Samsung, and ZTE.
Ericsson Cloud RANEricsson, which is facing challenges in the telecom equipment manufacturing business, revealed that its revenue contribution from the United States has dwindled from 40 percent in 2022 to 32 percent in the same period of 2023. However, there is ambiguity regarding whether the success of Ericsson’s competitors can be attributed to its losses in the United States.

On a global scale, Ericsson’s sales in India have experienced a significant boost, contributing 12 percent to its total sales compared to 4 percent in the previous year.

Meanwhile, sales in China remained stable at 4 percent of total revenue, as did sales in Japan.

Notably, Ericsson’s sales in the United Kingdom saw a slight increase, rising to 4 percent from 3 percent.

Breaking down the revenue streams, Ericsson has generated SEK 171.4 billion from Networks, SEK 63.6 billion from Cloud Software and Services, and SEK 25.7 billion from Enterprises in 2023.

Full-Year Performance Highlights:

Networks sales experienced an 11 percent decrease to SEK 171.4 billion.

Cloud Software and Services sales increased by 5 percent to SEK 63.6 billion.

Enterprise sales showed an impressive growth of 76 percent, reaching SEK 25.7 billion.

Sales in the “Other” segment decreased by -14 percent to SEK 2.5 billion.

Examining regional performance, sales in the South East Asia, Oceania, and India market area exhibited a remarkable 61 percent YoY increase when adjusted for comparable units and currency. This surge was driven by significant market share gains in India, capitalizing on the substantial growth observed in the Indian market throughout 2023.

In contrast, market area North East Asia saw a 9 percent decrease in sales adjusted for comparable units and currency, primarily due to the completion of the initial 5G build-out phase by operators in several markets.

North America witnessed a significant decline of 41 percent YoY, with Networks sales decreasing by 49 percent, a consequence of reduced customer capital expenditure and lower inventory levels following high investment levels in 2021 and 2022. However, Cloud Software and Services sales in North America increased by 2 percent.

Market areas Europe and Latin America experienced 9 percent YoY decline in sales adjusted for comparable units and currency, with reported sales decreasing by 3 percent. This downturn was attributed to reduced investments in Europe, offset partially by market share gains.

In the Middle East and Africa, sales adjusted for comparable units and currency increased by 1 percent YoY, driven by new 5G investments in certain Middle East countries, though Cloud Software and Services sales declined slightly due to the timing of project milestones.

The number of employees on December 31, 2023, was 99,952 (105,529), a total decrease of -5,577 employees compared to 2022. The decrease was driven by cost-reduction activities.

Baburajan Kizhakedath

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