In a recent announcement, Ericsson AB, a major provider of 5G networking equipment worldwide, revealed plans to reduce its workforce in Sweden by 1,200 jobs. The decision comes as a response to lower orders and cautious spending from mobile service providers. The company aims to adapt to these challenges by implementing cost-cutting measures, including reducing facilities, limiting consultant usage, and streamlining processes.
Ericsson’s move to cut jobs represents approximately 8.6% of its Swedish workforce as of the end of 2023. This decision underscores the ongoing struggles faced by European telecom equipment manufacturers like Ericsson and Nokia Oyj in bouncing back from a slowdown in spending within the mobile services industry.
Earlier this year, Ericsson issued a warning that its market outside of China would continue to decline in 2024, attributing it to the persistently low investment levels by many operators. Mobile carriers have been scaling back on network spending, citing a competitive environment in Europe that is adversely affecting return on investments.
Adding to the challenges, both Ericsson and Nokia must contend with the emergence of “open radio access networks,” a technology that allows carriers to utilize multiple vendors more easily, thereby intensifying competition for network components.
Approximately a year ago, Ericsson had announced a similar restructuring effort, planning to reduce its workforce by 8,500 staff, constituting about 8% of its total workforce. Its competitor, Nokia Oyj, followed suit in October with plans to cut up to 14,000 jobs, equivalent to 16% of its workforce.
Following the announcement, Ericsson’s shares experienced a slight decline of 0.8%, reaching 56.97 Swedish kronor at 1:08 p.m. in Stockholm. Year-to-date, the company’s shares have seen a decrease of 9.9%, reflecting investor concerns amidst the challenging market conditions.
Ericsson’s decision to streamline its operations and reduce its workforce underscores the company’s efforts to navigate through the evolving landscape of the telecommunications industry while striving to maintain competitiveness and financial sustainability in the face of market pressures.
