Ericsson CEO Borje Ekholm, who joined the telecom equipment major in January, announced financial reports for the third quarter of 2017 indicating gloomy picture for the Sweden-based company.

Third quarter revenue of Ericsson fell 6 percent to SEK 47.8 billion or $5.86 billion primarily due to lack of growth in telecom operators’ Capex (capital expenditure). Ericsson said networks sales to telecom operators fell 4 percent.

Ericsson generated SEK 35.502 billion (–4 percent) from networks and SEK 10.264 billion (–12 percent) from IT & Cloud business.

Ericsson achieved a gross margin of 25.4 percent in Q3 2017 against 28.3 percent in Q3 2016.

Ericsson reported operating loss of SEK 4.8 billion against operating income of SEK 0.3 billion. In addition, Ericsson posted net loss of SEK 4.3 billion against net loss of SEK 0.2 billion.

“We continue to execute on our focused business strategy. While more remains to be done we are starting to see some encouraging improvements in our performance despite a continued challenging market,” Ericsson CEO Borje Ekholm said.

Ericsson will close and divest the ICT center in Canada and decided to write off SEK 1.6 billion.

Ericsson did not reveal the revenue details of India business as it decided to combine India region with small regions in Asia.

India continues to be the third largest telecom market for Ericsson behind North America and China. India contributes 7 percent revenue to total revenue of Ericsson in Q3 2017 against 6 percent in Q3 2016.

Ericsson said its revenue in South East Asia, Oceania and India fell 3 percent to SEK 7.5 billion.

South East Asia, Oceania and India sales declined due to currency movements and timing of mobile broadband infrastructure investments. Ericsson said this was partly offset by increased IT & Cloud sales primarily in India.

Ericsson said growth is returning in several countries as operators are increasing their investments in network capacity targeting customer experience. Sales in Mainland China fell as the telecom market is normalizing following a period of significant 4G deployments, representing more than 60 percent of global 4G volumes in the industry.

Ericsson managed to increase its LTE market shares in Mainland China to position Ericsson in the 5G market.

Ericsson slashed 3,000 jobs despite adding 1,100 new jobs in R&D.

Ericsson Radio System portfolio, accounting for 55 percent of radio volumes year to date, is proving competitive, contributing both to improved earnings and a stronger market position.

Ericsson has either exited, renegotiated or transformed 13 out of the 42 managed services contracts, resulting in an annualized profit improvement of SEK 0.4 billion.

Ericsson said the loss making IT & Cloud business is of strategic importance as its telecom customers are preparing for 5G and will digitalize their operations and invest in a future network architecture based on software-defined logic.

Ericsson will expand focus to improve profitability through increased efficiency in service delivery. In addition, it will scale the software part of the business mix and increase the level of pre-integration services, which will lead to a higher gross margin but lower services sales.

Baburajan K