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Sales growth in India partly offset the softening in other markets

Swedish telecommunications giant Ericsson has seen a boost in its global sales, largely due to the accelerated 5G deployment in India, which stands as its second-largest market behind the US, contributing 14% to its revenue in the quarter ended June 2023.

India, a part of Ericsson’s South East Asia and Oceania region, was the only market to report consistent growth across all regions, providing a counterbalance to the sharp decline in sales witnessed in North America, the company’s largest market.

“In networks, we saw strong execution with record build-out speed in India, where we now have a leading market share,” said Börje Ekholm, President and CEO of Ericsson. “Sales growth in India partly offset the expected softening we saw in other markets, notably in North America, where build-out pace moderated and customer inventory levels were reduce.”

The company’s quarterly report showed a doubling of network sales in the South East Asia, Oceania, and India region, contrasted by a decline in other markets, notably in North America. Here, customers have reduced their capital expenditure and inventory levels after high investment in the preceding years. Network sales, making up approximately 66% of the company’s total sales, have seen a 3% increase to SEK 64.4 billion.

On an adjusted basis, sales for comparable units and currency increased by 71% on-year for the quarter ended June 2023 in the region, primarily driven by 5G market share gains in India. Reported sales increased by 74% on-year.

Ericsson flagged risks of being unable to supply equipment due to throttling of supplies of key ASIC and FPGA components, printed circuit boards, standard electronics or semiconductors (including foundry node availability) from very few suppliers, due to various reasons including natural disasters, conflicts or other potentially disruptive events. It noted that the current tensions between the US and China, and the tense ‘cross strait relations’, had increased this risk.

“Accordingly, there is a risk that the Company will be unable to obtain key supplies it needs to produce Ericsson’s products and provide Ericsson’s services on commercially reasonable terms, in time, or at all. This is particularly critical in connection with large projects like the current 5G rollout in India,” it said.

The Swedish gear maker has bagged 5G equipment supply contracts from Reliance Jio and Bharti Airtel which between them have deployed over 275,000 base stations across the country since October last year. The number one and number two carriers aim to complete pan-India 5G coverage by 2024 and urban coverage by the year end.

The telecom equipment maker is also in discussions India’s third largest carrier Vodafone Idea, Mint reported earlier this month, which will bring additional upside in the coming months when the contracts are finalised. The deal will, however, be contingent on the carrier getting external funding.

Ericsson is also increasing its local manufacturing capacities to meet with the local demand as well as target exports from India. The company aims to make India its global 5G hub. Livemint

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