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Ericsson's Middle East sales slump on Arab unrest

Network giant Ericsson's sales in the Middle East have plunged on the back of political unrest

Ericsson's Middle East sales slump on Arab unrest
Unrest in Arab states has hurt Ericsson sales.

Middle East sales at Ericsson, the world's largest seller of network infrastructure to the telecommunications market, plummeted 22% in its latest quarter on the back of protests and political unrest in the region.

In the three-month period ending March 31 2011, the Stockholm, Sweden-based vendor reported an annual fall in ME and Gulf revenues from SEK3.9 billion ($641.2 million) the previous year to SEK3.1 billion ($509.7 million). Sequentially, regional sales tumbled 34%.

Revenues across the entire group in all geographies increased 17% to SEK53 billion ($8.7 billion), while net income rose 220% to SEK4.1 billion ($674.2 million).

In a note to investors and financial analysts published today, Ericsson wrote that Middle East and Gulf sales had been "impacted by political unrest in the region". Ericsson has contracts with major telecommunications operators in markets that have been disrupted by popular Arab uprisings, including Al Jeel Al Jadeed for Technology in Libya, Syrian mobile operator MTN Syria, and Etisalat MISR in Egypt.

However, the company did report that while its business had declined in its 2G unit, mobile broadband sales "continued to increase across the region" and were now "almost on a par with 2G volumes". Ericsson added that it expected 4G and LTE services "to be rolled out in parts of the Gulf region later this year".

Managed services revenues increased both year-on-year and sequentially, Ericsson disclosed, but consulting, systems integration and network rollout all "had a weak quarter".

Sales in sub-Saharan Africa also suffered, falling 9% year-on-year, but rising 9% sequentially.

Geographically speaking, Ericsson enjoyed a particularly strong quarter in China and North East Asia, where sales rocketed 74% to SEK8.6 billion ($1.4 billion). Revenues derived from North American markets swelled 39% to SEK13.2 billion ($2.2 billion), while Western and Central Europe retreated from SEK5.2 billion ($855.3 million) to SEK4.8 billion ($789.4 million).

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