Ericsson to reshuffle operations, two executives to depart

Ericsson on Wednesday laid out plans to restructure its operations to focus on business customers and mobile infrastructure, announcing two senior executives will leave the company.

Chief Executive Borje Ekholm said the move was aimed at boosting performance rather than cutting costs, and said it was too early to say whether there would be job losses.

Ericsson, which competes with Nokia and Huawei for telecom equipment sales, had a rough start to the year that eroded its share price and fuelled an outcry from shareholders.

The company in February disclosed an internal investigation about misconduct in Iraq that exposed it to a potential fine from U.S. regulators.

Ekholm insisted that the current strategy reshuffle was not linked with the events from earlier this year, which he said had rather delayed the launch.

“What we are doing is kind of keeping the core of our strategy which is to lead in mobile infrastructure business,” Ekholm said in an interview.

“Our next leg of the strategy is to start to grow and establish a presence in the enterprise segment.”

A new business unit was created by merging digital services and managed services to build cloud expertise and products for automation and artificial intelligence, to be led by Per Narvinger, who joined Ericsson in 1997.

The digital services business has been struggling to return to growth due to the loss of 5G core opportunities in China, a slower ramp-up elsewhere and higher research spending.

“We hope that with a divisional shake-up and new management, this problem area can show improvement after a number of years of disappointment,” Citi analysts wrote in a research note.

Another new unit for enterprise wireless business, to be led by Cradlepoint CEO George Mulhern, will develop 5G-related products to meet the needs of big businesses.

“It’s in a way simplifying the structure on our side and coordinating our initiatives,” Ekholm said.

Ericsson executives Arun Bansal, currently executive vice president, and Peter Laurin, head of business area managed services, will leave the company.

The new organisation will take effect June 1.

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