Ericsson on Tuesday lowered its growth outlook for the global telco market and said its cost-cutting programme will result in higher restructuring costs than previously forecast.
At its annual Capital Markets Day, the Swedish equipment maker said it expects the total addressable telecom market to show a CAGR of approximately 2%-4% in 2014-2018, down from its forecast last year of 3%-5% CAGR in 2013-2017.
Ericsson said it expects to outperform the market during the forecast period by driving growth in its core business – radio, core and transmission networks and telco services – and by establishing a leadership position in several targeted sectors, including cloud, IP networks, TV and media, OSS and BSS, as well as solutions aimed at specific industry verticals, or what Ericsson calls, Industry & Society.
Ericsson said it has generated revenue of SEK45 billion (€4.8 billion) from these targeted areas in the 12 months to date, up from SEK35 billion a year earlier.
In addition, Ericsson said it is on track to meet is annual cost savings target of SEK9 billion (€966 million) in 2017. Half of the savings are expected to come from reduced operating expenses, the other half will come from lowered cost of sales.
Ericsson said its cost-cutting scheme will result in restructuring charges of SEK3.5 billion-SEK4.5 billion in 2015-2017, up from its earlier forecast of SEK3 billion-SEK4 billion.
