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Ericsson and Nokia face sales decline in India as telecom capex slows

During the July-Sept period, Ericsson's India revenue plunged 68% Y-o-Y, while Nokia's India sales saw a 43 per cent Y-o-Y dip. Both firms supply network solutions to telecom operators in India

Ericsson

Ericsson(Photo: PTI)

Abhijeet Kumar New Delhi

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Telecom equipment manufacturers Ericsson and Nokia have experienced a steep drop in sales from their Indian operations for the fourth consecutive quarter. This decline is largely attributed to a significant reduction in capital expenditure by telecom operators, particularly in 5G networks, according to a Financial Express report.

During July-September, Ericsson’s India revenue plunged 68 per cent year-on-year (Y-o-Y), amounting to 3.09 billion Swedish crowns (approximately Rs 2,466 crore). Meanwhile, Nokia’s India sales saw a 43 per cent Y-o-Y decrease, falling to 316 million euros (about Rs 2,874 crore) in constant currency terms.

On a quarter-on-quarter (Q-o-Q) basis, Ericsson’s sales dipped 14 per cent, while Nokia saw a 4 per cent decline.
 

Impact of reduced Capex and 5G rollout


In India, both companies supply network solutions, including Radio Access Network (RAN) equipment, to telecom operators. Recently, Vodafone Idea awarded a Rs 30,000 crore contract to Nokia, Ericsson, and Samsung for 4G network upgrades and 5G deployment.

According to Nokia’s President and CEO Pekka Lundmark, the drop in sales was primarily driven by a strong performance in the same quarter last year. Similarly, Ericsson noted that growth had been impacted by lower sales in South East Asia, Oceania, and India due to normalised operator investments following a peak in 2023.

Despite the sales dip, India’s rapid 5G expansion has been notable, with 97 per cent of cities and 80 per cent of the population covered within two years. However, analysts have pointed out that telecom operators have yet to see significant returns on their 5G investments, due to limited monetisation opportunities in the consumer segment and a lack of enterprise use cases.

The Cellular Operators Association of India (COAI) has echoed these concerns, stating that there has been no return on investment (ROI) for operators from 5G thus far.

Future prospects and global performance


With the peak of the 5G rollout behind them, Ericsson’s revenue from India now represents just 5 per cent of its total global sales, down from 15 per cent a year ago. For Nokia, India’s share of global revenue has dropped to 7.3 per cent, down from 12 per cent.

Currently, the only viable monetisation opportunity for telecom operators in India lies in fixed wireless access (FWA) broadband services. Nokia highlighted strong growth in this area in India, even as European markets declined.

Analysts suggest that recent contract wins and the FWA opportunity could help global equipment makers, like Nokia and Ericsson, recover some of their lost sales in India.

Globally, Nokia’s net sales fell 7 per cent year-on-year to 4.3 billion euros (approximately Rs 39,124 crore), but the company saw a 22 per cent rise in net profit, reaching 358 million euros (Rs 3,257 crore). 

In contrast, Ericsson’s global sales dropped 4 per cent Y-o-Y to 61.8 billion Swedish crowns (about Rs 49,396 crore), with a reported net profit of 3.9 billion Swedish crowns (Rs 3,115 crore).

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First Published: Oct 18 2024 | 10:28 AM IST

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