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Ericsson to lay off 1,200 staff in Sweden as 5G spending slows

Published 03/25/2024, 08:08 AM
Updated 03/25/2024, 10:00 AM
© Reuters. FILE PHOTO: Ericsson logo is displayed on the company's headquarters building in Stockholm, Sweden, January 23, 2024. TT News Agency/Henrik Montgomery via REUTERS/File Photo

COPENHAGEN (Reuters) -Ericsson on Monday said it would lay off about 1,200 employees in Sweden as part of cost-cutting measures announced earlier this year as customers reduce their spending on 5G gear.

After cutting thousands of staff last year, telecoms equipment suppliers like Ericsson (BS:ERICAs) and Finland's Nokia (HE:NOKIA) are expecting 2024 to remain challenging as 5G equipment sales slow in North America and are also expected to ease from record levels in India.

Ericsson told Reuters in January it could look at further cost cuts this year including layoffs but had not given specific figures.

Citing ongoing negotiations with unions, the company on Monday declined to give a figure for how much cash it could save by cutting staff.

"As previously stated, Ericsson expects a challenging mobile networks market in 2024, with further volume contraction as customers remain cautious," it said in a statement.

The company said it would continue with initiatives to increase operational efficiency during 2024, adding it would not make any separate statements on those.

"It's not the first (wave of lay-offs). It won't be the last," said analyst Paolo Pescatore at PP Foresight, adding there could be further layoffs later in the year and potentially into 2025 due to the challenges in the mobile infrastructure market.

"Let's be honest, 5G has not been the runaway success that everyone had hoped for; very much a slow-burner," he added.

Ericsson said cost saving initiatives included reducing the number of consultants, streamlining its processes and reducing facilities.

© Reuters. FILE PHOTO: Ericsson logo is displayed on the company's headquarters building in Stockholm, Sweden, January 23, 2024. TT News Agency/Henrik Montgomery via REUTERS/File Photo

The company had almost 100,000 employees at the end of last year, according to its annual report.

Shares in Ericsson were down 0.75% at 1320 GMT.

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