(Bloomberg) — Ericsson AB earnings missed analysts’ forecasts in the fourth quarter, as an expected rebound in sales to India didn’t materialize in the period.
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Adjusted earnings before interest and taxes were 9.8 billion Swedish kronor ($894 million), up 33% from a year earlier, the Stockholm-based company said in a statement on Friday. That compared to an average of 10.3 billion kronor forecast by analysts surveyed by Bloomberg. Adjusted operating margin was 13.4%, compared to an average estimate of 14.03%.
Ericsson and its Nordic competitor Nokia Oyj, which reports results next week, are contending with a weak market for telecom equipment that has lasted for years as many operators delay expensive network upgrades. It has responded with cost-cutting measures and a pivot to markets such as the US and India. The moves have been welcomed by investors, with shares rallying more than 60% in the last year.
The market for Radio Access Networks, or RAN, may improve slightly in the short term, but “the long term outlook remains subdued” over the next five years, the Dell’Oro Group, which tracks the telecom industry, said in a report on Friday.
“We see further signs that the overall RAN market is now stabilizing, with strong growth in North America supporting a return to Networks sales growth,” Chief Executive Officer Börje Ekholm said in the statement.
Net sales increased 1% to 72.9 billion kronor in the fourth quarter from a year earlier, driven by adjusted growth of 54% in North America. Business there was buoyed by a $14 billion contract with US operator AT&T Inc. that began to pay off in the previous period. Revenue in Europe and Latin America also rose, while other markets, including India, declined significantly.
The Swedish company is anticipating increased sales in India as Bharti Airtel Ltd. and Vodafone Idea Ltd. boost investment. 5G spending in the country has slowed sharply after a massive roll-out in 2022.
A contract with Bharti last year extended an existing partnership, while deliveries for a new Vodafone Idea contract have not occurred yet, according to Chief Financial Officer Lars Sandström. “India is stabilizing, but no big recovery in that sense yet,” he said in an interview.
Europe is showing some signs of growth after years of sluggishness, with Ericsson winning a contract with Spanish carrier Masorange to build an OpenRAN-compliant network last year.
