Telecom gear makers Ericsson and Nokia have witnessed a sharp decline in the sales from their India business for the fourth-straight quarter. The reason for the same can be attributed to a significant fall in capital expenditure levels of the telecom operator especially on the 5G networks.
In the July-September quarter, Ericsson’s India sales fell 68% year-on-year (YoY) to 3.09 billion Swedish crowns (around Rs 2,466 crore). On the other hand, Nokia India sales fell 43% YoY to 316 million euros (around Rs 2,874 crore) in constant currency terms.
On a quarter on quarter (QoQ) basis, Ericsson sales fell 14%, while for Nokia the sales fell 4%.
In India, the companies are supplying network equipment such as Radio Access Network (RAN) and other solutions to telecom operators. Lately, Vodafone Idea also awarded a Rs 30,000 crore 4G network upgradation and 5G network rollout deal to Nokia, Ericsson and Samsung.
“Three quarters of the decline was driven by India due to a strong year-ago quarter,” Nokia President and CEO Pekka Lundmark said in an earnings release.
Ericsson too witnessed a similar trend. “Growth was offset by materially lower sales in market area South East Asia, Oceania and India as operator capex investments in India have normalized following a peak in 2023,” Ericsson said in its earnings release.
Until the July-September quarter of 2023, the companies were experiencing record sales from its India operations.
A continuous fall in sales of Ericsson and Nokia assumes significance as in two years of 5G launch, India has covered 97% of the cities and 80% of the population. A total of 457,179 5G sites have been deployed by the companies as of September end, according to government data. However, in absence of monetisation opportunities largely in the consumer space as well as lack of usecases for enterprises in 5G, the returns on investments have been negligible for the telecom operators, analysts said.
According to Cellular Operators Association of India (COAI), which represents major telecom operators, there has been no return on investments (ROI) for the telecom operators from 5G yet as the enterprise usecases did not come up as expected.
With 5G network rollout reaching the peak, Ericsson’s India business contribution to total global sales fell to 5% during the quarter from 15% in the year-ago period. For Nokia, India sales constitute 7.3% of the total global revenues, down from 12% in the year-ago period.
Currently, fixed wireless access (FWA) broadband services is the only monetisation opportunity for the telecom operators. “India grew strongly as fixed wireless access deployments ramped in the region while Europe declined,” Nokia said.
Analysts said the recent deal wins and FWA opportunity may help the global equipment makers to revive their sales from the country.
Globally, Nokia’s net sales fell 7% y-o-y to 4.3 billion euros (around Rs 39,124 crore). The company reported a 22% increase in net profit to 358 million euros (Rs 3,257 crore) in the quarter.
On the other hand, Ericsson’s global sales fell 4% YoY to 61.8 billion Swedish crowns (around Rs 49,396 crore). The company reported a net profit of 3.9 billion Swedish crowns (Rs 3,115 crore).
