Ericsson will no longer search for business beyond the telecoms sector and will refocus on selling networks to mobile phone companies in a move to cut costs and halt a dramatic fall in its share price. Its shares have fallen 30 per cent in two years.
In 2014 Ericsson announced it would diversify so that by 2020 up to 25 per cent of revenue would come from industries beyond telecoms, such as media, utilities and transport, from an estimated 10 percent in 2013. The plan has been a fail and the company will drop the target as new CEO Borje Ekholm repositions to focus on the core business of mobile networks.
Reuters quoted Ericsson’s new head of Digital Services Ulf Ewaldsson: “We will focus on telco clients and networks exclusively for now.”
Ekholm revealed a cost-cutting plan in March and announced up to $1.7 billion in provisions, write-offs and restructuring. Ericsson sees opportunities to sell products to telecom clients which will need to upgrade their networks to address a greater flow of data enabled by 5G. It will also build additional capacity to connect objects around the world for the Internet of Things.