Telecom equipment maker Ericsson on Tuesday reported a 32% quarter-on-quarter (q-o-q) decline in revenue from its India operations to 3.6 billion Swedish crowns (around Rs 2,850 crore) for the April-June quarter, according to the company’s earnings.
On a year-on-year (y-o-y) basis, the company’s sales from India fell 60% in the April-June quarter, owing to the higher base of last year when telecom operators were aggressively rolling out 5G networks.
This marks the third consecutive sequential drop in quarterly revenues for Ericsson in India. In the preceding quarter, the company’s sales were at 5.3 billion Swedish crowns (around Rs 4,000 crore).
Until the July-September quarter of 2023, the company had been experiencing record sales from its India operations.
The decline in sales during the quarter was attributed to a return to normalised investment levels by telecom operators, following the rapid rollout pace of 5G networks by operators – Jio and Airtel.
“We expect market conditions to remain challenging this year, as the pace of India investments slow, however our sales will benefit during the second half from contract deliveries in North America,” Börje Ekholm, president and CEO, Ericsson said in the earnings statement.
With the fall in sales, India’s share of total global sales of Ericsson fell to 6% during the quarter from 10% in the previous quarter. In the same period last year, India’s share of global sales of the company was at 14%.
From January to June 2024 also, India’s contribution to Ericsson’s global sales fell to 8% from 12% in the year ago period. The US remains the largest market for Ericsson, accounting for 38% of the company’s total sales in the April-June quarter, up from 32% in the same period last year.
“In Q2, we maintained our leading market position, returned to growth in North America, and delivered strong gross margin expansion and free cash flow,” Ekholm added.
In India, the company is supplying network equipment such as 5G Radio Access Network (RAN) to telecom operators Reliance Jio and Bharti Airtel. The company is also in discussions with Vodafone Idea to obtain new orders for 4G and 5G equipments.
On Thursday, Vodafone Idea’s shareholders also approved a preferential issue worth Rs 938 crore to Ericsson India, to settle part of outstanding dues. This will give Ericsson 0.9% stake in Vodafone Idea. Ericsson said the impact of the Vodafone Idea transaction is expected to be recognised in the company’s July-September results.
In the April-June quarter, Ericsson’s total sales globally fell 7% y-o-y to 59.8 billion Swedish crowns (around Rs 47,315 crore). Sequentially, the sales rose 12%.
In the combined Southeast Asia, Oceania and India, Ericsson’s revenue fell 44% y-o-y to 7.7 billion Swedish crowns (Rs 6,092 crore). Sequentially, the sales in the region fell 10%. In North America, the company’s sales rose by 15% y-o-y and 19% q-o-q.
During the quarter, the company incurred a loss of 11 billion Swedish crowns (Rs 8,695 crore) owing to higher expenses as well as impairment loss mainly attributed to the Vonage acquisition.
