Jan Frykhammar, executive vice president and CFO, will assume the CEO position till the telecom network and software maker find a new CEO.
Hans Vestberg spent 28 years at Ericsson including the last seven years as CEO. A statement from Ericsson did not say that the resignation of Hans Vestberg is connected to the alleged corruption issues.
Hans Vestberg was instrumental in leading the company for seven years through significant industry and company transformation.
Incidentally, Hans Vestberg was one of the strong contenders for becoming the chief executive officer of Microsoft before the US-based software company finalized Satya Nadella for the top position.
“In the current environment and as the company accelerates its strategy execution, the Board of Directors has decided that the time is right for a new leader to drive the next phase in Ericsson’s development,” said Ericsson Chairman Leif Johansson.
Hans Vestberg is leaving Ericsson at a time when the telecom infrastructure company is aiming to cut costs further.
Jan Frykhammar joined Ericsson 1991, and has held various positions in finance and business control.
Hans Vestberg will be available to support the Board and management during his term of notice of six months.
Why Hans Vestberg resigned
Ericsson last month confirmed that the Swedish company is facing a probe by the US authorities over an alleged corruption charge. Ericsson said it was co-operating with the U.S. authorities in the inquiry over possible corruption dating back three years – during the tenure of Hans Vestberg.
The US probe, which relates to Ericsson’s anti-corruption program and questions related to the Foreign Corrupt Practices Act, may result into huge penalty for Ericsson, according to a Reuters report.
Hans Vestberg, CEO of Ericsson since 2010, has also faced several questions from telecom industry analysts and shareholders over his use of a corporate jet to travel to sports events and his appointment as chair of Sweden’s Olympic Committee (SOC) when Ericsson is trying to cut costs and rethink its strategy.
Han Vestberg has clarified that his trips were with telecom clients and not in breach of Ericsson policy and that the SOC role would not distract him from his job as chief of Sweden’s largest exporter.
Ericsson posted 11 percent drop in second quarter revenue to SEK 54.1 billion, while profit fell 26 percent to SEK 1.6 billion.
Ericsson could not make huge acquisitions at a time when Nokia, under the aegis of CEO Rajeev Suri, acquired rival Alcatel-Lucent, revived the fortunes of Nokia Networks and sold the phone business to Microsoft.
Though Ericsson is talking about networked society, it could not gain its significant revenue streams from the connected business. Recently, Ericsson signed up with rival Cisco Systems to jointly sell some networking products to telecom operators.