Swedish telecom equipment vendor Ericsson is reportedly weighing an additional 1,000 job cuts after the company failed to secure a contract to manage the largest wireless network in Italy.
According to a Bloomberg report, Ericsson was not chosen to oversee the network merger and operation of CK Hutchinson Holdings and VimpelCom to create Italy’s biggest wireless network, a contract that was valued at around $1 billion. The merger of Hutchison’s 3 Italia and VimpelCom’s Wind Telecommunications was approved by the European Union back in September.
Ericsson, which currently oversees Hutchison’s network and a portion of Wind’s, was up against Chinese companies ZTE and Huawei as well as Finland’s Nokia for the contract, the report said. Bloomberg sources indicated ZTE is close to clinching the win, and Ericsson is now looking at laying off around 1,000 staff members in the country.
The blow comes as Ericsson struggles to stay on its feet amid a shifting industry landscape.
Over the past several quarters, the company has seen sales, income, and margins decline thanks to slack demand for mobile broadband and other “negative industry trends.” Ericsson has attempted to revamp its profile with a slate of value-added and next generation technologies – including an Accelerated Network Build solution to cut build times by 50 percent, Cloud and NFV solutions, and 5G technologies – but has yet to see real results.
In the first half of 2016, the company slashed some 8,000 employees and in October announced plans to cut an additional 3,000 positions from its Swedish workforce to help offset the slide.
The loss of such a major contract, it seems, will place additional pressure on incoming Ericsson CEO Borje Ekholm, who was appointed in October and will take the reins at the company in January. At the time of his appointment, Ekholm said he was committed to continue Ericsson’s cost cutting strategy and return the company to profitability, but he’ll certainly have an uphill battle.
