Ericsson has decided to exit from certain subscale agreements and products in Cloud Software and Services business — following a portfolio and customer contract review.
Ericsson said this will have a negative impact on EBIT of SEK –0.8 billion or $76 million in Q4 2022, of which SEK –0.7 billion is expected to impact cash flow, mainly in 2023.
The telecom gear maker said last month it would restructure parts of the business, which it expanded in July with the $6.2 billion acquisition of cloud communications firm Vonage, to improve profitability.
Ericsson will publish Q4 and full-year 2022 results on January 20 at approximately 7:00 am CET.
Ericsson’s key priorities include limiting subscale software development, accelerating automation to lower deployment and maintenance efforts and changing focus from market share gains to profitable business.
Ericsson is laying the foundation to turn around the Cloud Software and Services strategy. The target is to reach break-even in full-year 2023 on EBIT/EBITA level with gradual improvements towards long-term attractive profitability.
Ericsson’s Cloud Software and Services business addresses three distinct offering areas where Ericsson has leading positions including (i) Network Managed Services and (ii) Business and Operations Support Systems which show good business progress but are offset by (iii) Core Networks which has gained significant market share but with negative development of profitability.