Ericsson's net income dropped by a fifth in its second quarter, as double digit sales growth continued to be offset by restructuring costs and currency fluctuations.

The Swedish vendor's profits hit SEK2.1 billion (€225 million), down from SEK2.7 billion (€289 billion) a year ago. However, net income increased by 46 percent on the previous quarter.

Sales increased 11 percent to SEK60.7 billion (€6.5 billion) but fell six percent on an underlying basis. Ericsson said its mobile broadband business was down four percent on 2014 but had stabilised during the past three months.

Spending in Western and Central Europe was up 12 percent to SEK5.1 billion (€547 million), as operators looked to drive operational effiencies and improve network quality. It highlighted its Global Services wing as having a particularly strong performance across the continent.

Chief Financial Officer Jan Frykhammar told European Communications it benefited from mobile broadband spending in UK, France, Italy and Spain.

It also said LTE deployments in the Middle East, India and South East Asia were partially offsetting the North American decline.

[Read more: Ericsson signs 4G, mobile wallet deals in Asia and Africa]

Latin America and Northern Europe and Central Asia both saw sales fall by six percent, with slower spending in mobile broadband across Russia. Ericsson said its Latin America business was hit by currency fluctuations and falling capex.

For the second quarter in a row, India saw the biggest sales growth. Revenues were up 85 percent, thanks to operators building networks to meet booming data usage.

Sales in its networks division were up eight percent to SEK31.2 billion (€3.3 billion) but fell nine percent on an underlying basis. Ericsson blamed the effects of currency and lower activity in North America and Japan.

However, Ericsson noted that profitability has recovered after the segment had a "weak" first quarter.

Global services saw sales increase by 14 percent to SEK26.4 billion (€2.82 billion) but fell two percent on a like for like basis because of lower activity in its Network Rollout business.

[Read more: Ericsson selected for Norwegian power grid modernisation]

The support solutions division's sales were down 13 percent on an underlying basis to SEK3.1 billion (€332 million), with falling software licensing sales in its TV and Media business blamed. On a like for like basis, sales were up nine percent.

The vendor's ongoing cost-saving plan saw 2,100 jobs shed in Sweden during the quarter, which Ericsson said led to higher than normal restructuring costs.

Ericsson is planning to make savings of SEK9 billion (€964 million) by 2017 and said it should start to bear the fruits of this programme by the end of 2015.

While the vendor has no plans to make a blockbuster takeover such as Nokia's acquisition, Frykhammar said the vendor will benefit from the wave of consolidation among operators.

He said: "Our view is this consolidation is something for the long term benefit of the business. It creates stronger customers who want to focus on quality as a differentiator.

"With any operator consolidation, they enter a period where they look at the assets they have acquired. But while there is a short to mid-term fall in spending, there is an opportunity for support services and software. The capex opportunity comes later."

More News

Iliad enters content game in France, finally launches Italian mobile business Iliad enters content game in France, finally launches Italian mobile business Iliad has acquired football rights in France and launched its opco in Italy as it looks to reboot after a disappointing set of financial results. More detail
Three UK appoints new CCO, CFO Three UK appoints new CCO, CFO The departure of Three UK's Chief Commercial Officer after just 18 months in the job has triggered a shake-up of the mobile operator's top team. More detail
TalkTalk to sell enterprise customer base to Daisy as it registers full-year loss TalkTalk to sell enterprise customer base to Daisy as it registers full-year loss TalkTalk has agreed to sell 80,000 business customers to rival Daisy Group in a £175 million deal. More detail
A1 Telekom Austria Group rebrand reaches Bulgaria A1 Telekom Austria Group rebrand reaches Bulgaria Bulgaria is the third A1 Telekom Austria Group opco to get rebranded as the telco looks to market itself as a provider of "advanced" IT, IoT, cloud and content services. More detail
Orange Business Services puts IoT to use on saving ships’ fuel costs Orange Business Services puts IoT to use on saving ships’ fuel costs Orange Business Services has expanded its work with Dobroflot by developing a customised IoT solution for the Russian fishing company. More detail
    

 

European Communications is now
Mobile Europe and European Communications

  

From June 2018, European Communications magazine 
has merged with its sister title Mobile Europe, into 
Mobile Europe and European Communications.

No more new content is being published on this site - 

for the latest news and features, please go to:
www.mobileeurope.co.uk 

 

@eurocomms