Swedish telecom giant Ericsson has secured a new multi-billion-dollar deal with India’s Bharti Airtel to provide 5G equipment, according to two sources familiar with the development. This follows a recent $3.6 billion contract awarded to Ericsson, Nokia, and Samsung by Vodafone Idea for 5G gear, marking Ericsson’s continuing expansion in the Indian market.
These new agreements are set to bolster Ericsson’s revenue in the coming year, following a significant drop in Indian contracts during the first half of the year. On Tuesday, Ericsson reported that the global telecom equipment market is showing signs of recovery, as the company announced third-quarter earnings and sales exceeding expectations, driven by renewed demand for 5G equipment in North America. Following this announcement, Ericsson’s shares surged by 9%, hitting their highest point since April 2022.
Over the past two years, declining demand from North American telecom operators impacted major equipment makers like Ericsson and Nokia, forcing them to shift their focus to developing markets such as India, often at the expense of profit margins. However, Ericsson’s CEO, Borje Ekholm, noted that the market appears to be stabilizing, with North America, an early adopter of 5G, returning to growth.
Although Ericsson’s net sales dropped by 4% to 61.8 billion Swedish crowns ($5.92 billion), they still exceeded expectations of 61.6 billion crowns, with a more modest 1% decrease on an underlying basis. Mads Lindegaard Rosendal, a credit research analyst at Danske Bank, observed that this decline is a notable improvement compared to the 7% drop in the second quarter.
In North America, sales soared by more than 50%, reaching 20.4 billion crowns, as demand recovered from a low base in 2022. Lars Sandström, Ericsson’s finance chief, credited part of this growth to ramped-up sales to AT&T, which had signed a $14 billion, five-year deal last year. Sandström added that other North American customers are also continuing to invest, further fueling growth in the region.
Outside of North America, however, the outlook remains mixed. Sales in Europe remained flat, while Latin America and other markets experienced declines, with some regions seeing double-digit drops. India, which had been a strong performer last year, has significantly slowed, although the new contracts with Vodafone Idea and Bharti Airtel offer renewed potential.
Overall, the company’s adjusted gross margin jumped to 46.3% from 39.2% a year earlier, driven by shifts in the geographic mix of sales. Ericsson’s adjusted core earnings, excluding impairments, reached 7.33 billion crowns, surpassing analysts’ expectations of 5.75 billion crowns. This marked a significant improvement from the 3.9 billion crowns reported in the same period last year.
