Ericsson plans job cut, $687 mn charges due to failed BSS strategy

Telecom equipment maker Ericsson will book charges of 6.1 billion crowns or $687 million for the fourth quarter as its strategy for its loss-making Business Support System (BSS) unit did not help in winning customers.
EricssonThe BSS unit of Ericsson, the third largest telecom equipment maker, provides real-time charging and billing products.

Ericsson’s BSS strategy was to focus on large transformation projects based on pre-integrated BSS solutions. The investment and the development of a next generation BSS platform called the full-stack Revenue Manager has not generated any revenues for Ericsson’s BSS unit.

The telecom equipment maker faced delays in the BSS product and feature development that resulted into a less competitive full-stack Revenue Manager. Ericsson’s BSS team made investment in full-stack Revenue Manager, causing further delays in product releases of the established platform.

“The anticipated customer demand has not materialized,” Ericsson said. “Certain complex transformation projects experienced delays and cost overruns.”

Ericsson said it would speed up restructuring of the BSS business, part of its Digital Services business which accounts for around 17 percent of group sales, and concentrate on its core products, materially reducing BSS losses in 2019.

The company said there will be restructuring charges due to the planned measures, including related headcount reductions, of 1.5 billion crowns in 2019. Ericsson did not reveal details about the job cut.

The reshaped BSS strategy is expected to set Segment Digital Services on a strong path to achieving the target of low single-digit operating margin excluding restructuring in 2020, Ericsson said.