Cooperation with AT&T showed that Ericsson (ERIC.US) Q3 profit surpassed expectations

The Zhitong Finance App learned that Swedish telecom equipment manufacturer Ericsson (ERIC.US)'s third-quarter profit exceeded market expectations, mainly due to the company's cooperation with the US operator AT&T (T.US) beginning to show results.

According to financial reports, Ericsson's adjusted profit before interest and tax for the third quarter was SEK 7.3 billion (US$699 million), far exceeding analysts' expectations of 5.6 billion SEK. The adjusted operating margin was 11.9% compared to market expectations of 8.5%.

Ericsson CEO Börje Ekholm said in a statement: “We are seeing signs that the overall market is stabilizing, and the North American market as an early adopter is returning to growth. Although market development is ultimately in the hands of our customers, we are striving to achieve operational excellence regardless of market conditions.”

The telecom equipment market has experienced a difficult period over the past few quarters as operators cut back or delay network investments. Ericsson has taken aggressive cost reduction measures, including layoffs of thousands of employees, and signed a $14 billion contract with AT&T in December last year, winning the confidence of investors. As of Monday, Ericsson had a cumulative increase of 24% this year.

Ericsson previously said the OpenRAN contract with AT&T will boost revenue in the second half of this year. OpenRAN technology gives operators the flexibility to choose antenna and infrastructure vendors.

Ericsson's chief financial officer Lars Sandström said in an interview that after an “abnormally low” sales volume at the beginning of the year, sales were “unusually high” this quarter. He expects the next quarter and the new year to stabilize.

However, demand for devices has declined in some major markets. India was one of the fastest countries to deploy 5G in 2022, but the country has slowed spending, while many US operators have stocked up large amounts of equipment. Dell 'Oro Group, which tracks the telecommunications industry, said that in the first half of 2024, telecom operators' spending fell 10% compared to the same period last year, and will continue to decline for the rest of the year.

Ekholm added that Ericsson recently announced a joint venture with 12 other telecom operators to create an interface for app developers to access all mobile networks, which will continue to create “new opportunities for network monetization.”

Ericsson's competitor Nokia (NOK.US) in Northern Europe will announce third-quarter earnings on Thursday.