The new funding will enable Ericsson to carry out investments in R&D in wireless technologies between 2023 and 2025
Swedish vendor Ericsson confirmed it has signed two agreements for funding with the European Investment Bank (EIB) for a total of EUR 420 million ($456 million) of which EUR 250 million had been disbursed in last month, the company said in a release.
The new funding will help the vendor to strengthen its balance sheet and financial position and will also enable Ericsson to carry out investments in research and development (R&D) in relation to enhanced wireless technology between 2023 and 2025. The Nordic vendor stressed that the R&D investments are an important contributor into Ericsson’s overall plan to reach its Net-Zero target by 2040 through reduced energy consumption in the mobile networks globally.
Carl Mellander, Ericsson’s CFO, said: “Wireless technology will play a key role in transitioning towards a low-carbon economy. The signing of the funding agreements with the European Investment Bank provides Ericsson with increased flexibility to drive critical research and development into making our own products more competitive and energy efficient. This will benefit our operator customers as well as other industrial sectors in their efforts to create a positive impact.”
Ericsson also highlighted that these new loans represent a key part of its overall funding strategy, complementing other sources.
In November 2023, Ericsson announced the successful placement of a green bond for a total of EUR 500 million. The bond was issued within Ericsson’s Green Financing Framework, under the company’s Euro Medium Term Note Program (EMTN).
In December 2023, the vendor also signed a 7-year EUR 100 million green funding agreement with the Nordic Investment Bank (NIB), which will be used to finance R&D investments in wireless tech.
Ericsson CEO Börje Ekholm recently described a “difficult mobile networks market marked by persistent headwinds” in reporting fourth quarter and full year 2023 financials. He called the slowdown in North American spending “unprecedented.” Ekholm also acknowledged a spike in sales into India as carriers there rapidly deploy 5G but, he said, that business would call off as “the investment pace normalizes.”
Ericsson’s fourth quarter sales declined 17% year-over-year with a 23% decline in the networks business. Gross income decreased to around $2.8 billion from $3.4 billion in the same quarter last year.
Ekholm said Ericsson has engaged in a multi-faceted cost-cutting program, including a reduction of 9,000 headcount that started last year and will continue in 2024. This, he said, is among the “critical steps in building a stronger, more profitable Ericsson.”
