Ericsson maintains growth in MEA region

Sub-Saharan Africa drives MEA sales growth, despite global declines

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Ericsson maintains growth in MEA region Hans Vestberg said that Ericsson would seeks ways to increase efficiency in the coming year.
By  Roger Field Published  October 30, 2012

Ericsson, the world's biggest telecoms vendor, managed to increase sales in the MEA region by 11% in Q3, despite seeing a significant drop in global sales.

In Sub-Saharan Africa, total sales for Q3 increased 11% year-on-year to reach SEK 2.8 billion ($418m). This increase was driven by 3G rollouts and upgrades. However, 2G rollouts still represented the largest share of services and network revenues in the region.

In the Middle East, Q3 sales remained static at SEK 3.6 billion. Ericsson said global services and support solutions "developed favourably" in the Middle East. "Demand [in ME] is especially good for managed services and systems integrations as operators seek network performance quality, operational efficiencies as well as transformation of their OSS/BSS environments", Ericsson said in its earnings statement. "Networks sales were weak, impacted by political unrest in parts of the region, partly offset by continued LTE deployments."

But across its global operations, Ericsson fared less well, with a 42% drop in net income in the third quarter of the year owing to a steep decline in network sales. The company posted net income for Q3 of SEK 2.2 billion, down from SEK 3.8 billion in the same period last year. Third quarter sales decreased by 2% year-on-year and fell by 1% quarter-on-quarter to reach SEK 54.6 billion.

Ericsson said that the networks business decreased year-on-year due to weaker sales in parts of Europe, China, Korea and Russia as well as continued decline in CDMA equipment sales. This was partly offset by strong development in North America.

While sales struggled, Ericsson's Global Services unit increased its sales by 19% year- on-year to reach SEK 24.3 billion.

Speaking about the overall global results, Hans Vestberg, President and CEO, Ericsson, lauded growth in global services, but said that profitability was "not satisfactory". "Operating expenses for comparable units have declined -7% YoY and we also see steady improvements in execution of projects. These improvements are encouraging, but not enough and we will continue to proactively identify and execute additional efficiency gains and cost reductions," he said.

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