Ericsson Navigates Flat RAN Market with Strategic Focus on 5G Standalone Transition

Ericsson’s Mixed Quarter Amid Market Challenges

Telecommunications equipment giant Ericsson reported a mixed third quarter for the financial year, with sources indicating the vendor is navigating what it describes as a “flat” RAN market. According to reports, the company saw revenues drop by nine percent year-on-year to 56.2 billion Swedish kronor ($5.9 billion), though analysts suggest organic decline was just two percent when accounting for foreign-exchange movements.

CEO Börje Ekholm stated during an earnings call that the company has established margins at a “new long-term level” following strong operational execution. The report states that cloud software and services sales grew nine percent, driven by strong growth in core networks, providing a silver lining in an otherwise challenging quarter.

Regional Performance and Strategic Wins

According to the analysis, Ericsson recorded revenue growth in three out of four markets, with notable declines concentrated in the Americas where sales reportedly dropped eight percent. The company’s chief executive officer highlighted significant strategic wins in Europe, including an eight-year partnership with VodafoneThree in the UK valued at $1.3 billion.

“We also increased our share in the UK with an eight-year partnership with VodafoneThree to supply a significant majority of the mobile networks and the entire core network,” Ekholm stated, according to the earnings call transcript. Sources indicate the company also demonstrated growth in emerging markets including India and Japan, partially offsetting challenges in other regions.

Cost Management and Workforce Reductions

The report states that Ericsson’s headcount has dropped by 6,000 people, part of previously announced plans to cut 8,500 jobs in 2023. During the earnings call, Lars Sandström, senior VP and CFO at Ericsson, emphasized the need for continued cost discipline, stating: “We live in a flat RAN market, that is our planning assumption, and that means that we need to continuously fight with inflation coming through.”

Ekholm reportedly highlighted the company’s adoption of “new ways of working,” including increased use of AI to improve efficiency. Analysts suggest these cost measures mirror broader industry trends, similar to developments noted in EU nations’ procurement strategies and technology sector efficiency initiatives.

5G Standalone as Growth Catalyst

Despite current market conditions, Ekholm reportedly identified 5G Standalone (5G SA) as a significant growth opportunity. According to the report, only approximately one in five operators have upgraded to 5G SA networks, leaving substantial room for expansion. “The operators need to migrate to 5G Standalone, and that is something that’s going to be required in order to deliver the capabilities of 5G,” Ekholm stated.

Analysts suggest this transition is crucial for enabling advanced 5G features including network slicing, low latency, and high bandwidth applications. The recent deployment of AT&T’s nationwide 5G SA network in the United States reportedly demonstrates the growing momentum behind this technology transition.

Positioning for the 6G Future

Looking beyond current market challenges, Ericsson’s leadership reportedly sees the 5G SA transition as foundational for the eventual move to 6G technology. According to the earnings call, Ekholm expects 6G to arrive commercially before 2030 and emphasized that 5G SA deployments will “pave the way into that world.”

“What’s more important, by being in 5G SA, you create the monetization models that will be needed in 6G as well,” Ekholm added. This strategic positioning comes amid broader industry discussions about technology evolution, including debates around potential AI market bubbles and government technology funding challenges that could impact future infrastructure development.

According to analysts, Ericsson’s focus on cost management while investing in future technologies represents a balanced approach to navigating current market headwinds while positioning for long-term growth opportunities in the evolving telecommunications landscape.