In Q2, Börje Ekholm, President and CEO, Ericcson, said, “We remained focused on matters in our control to optimize our business amid a challenging market environment, with industry investment levels unsustainably low.”
As per Ericsson’s Q2 2024 results, the reported net sales of SEK 59.8 billion declined by -7% YoY, reflecting reduced operator investment levels across most geographies, while the North America market area grew by 14%.
In addition, a new 5G patent licensing agreement was signed during the quarter and the IPR licensing revenue increased to SEK 3.9 billion. Following new agreements, Ericsson is on track to deliver its 2024 IPR revenue target of SEK 12-13 billion as opportunities for further grow emerge.
82% of IPR licensing revenues were reported in the ‘networks’ segment, while the remainder fell into the ‘cloud software’ and ‘services’ segments.
Moreover, Ericsson’s reported gross income for Q2 2024 also increased to SEK 25.8 billion, with a gross margin of 43.1%. This was supported by increased IPR licensing revenues, cost-reduction actions and competitive portfolio offerings.
MEA Focus
On the other hand, the MEA market’s sales of SEK 4.9 billion declined by -8%, primarily due to macroeconomic headwinds and a slowdown in operator CapEx investments in several markets.
During Q2 2024, a key leadership transition occurred in the MEA region. Patrick Johansson was appointed as the new Head of Market Area Middle East & Africa (MMEA) and Senior Vice President, replacing Fadi Pharaon, and will hold office by August 2024.
In this quarter, Ericsson also opened its new office in Amman, Jordan, with Marwan Omari assigned as the General Manager of Ericsson Jordan. This reaffirms Ericsson’s commitment to Jordan by reinforcing its position within the country’s dynamic ICT industry.
In an MoU with Vodafone Oman, Ericsson’s ‘Connect To Learn’ program will be leveraged to enhance digital skills development, including programs designed to develop and attract Omani youth and talent into the ICT industry.
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Ericsson's Global Operations and Compliance Updates
Investments in R&D aimed at technological leadership and operational resilience, along with increased salaries, higher variable incentives, and the decision to stop capitalizing development expenses in the ‘enterprise’ sector, were partially balanced by savings achieved through cost reduction measures.
Ekholm told Telecom Review that Ericsson will persist in investing in their networks to ensure that they lead in an “open world.” This entails doubling down on open architecture that will result in networks that are programmable and easily accessible. They intend to integrate this approach on their Global Network Platform, announcing two additional partnerships with leading mobile network operators in Q2 2024.
Ericsson’s business operations are complex, involving the development, production and delivery of telecommunications solutions to customers in a very large number of jurisdictions.
In June 2024, Ericsson announced the end of the independent compliance monitor's term, which was initially appointed by the DOJ in June 2020 as part of the Deferred Prosecution Agreement (DPA).
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