New Ericsson CEO makes his mark

• Per Narvinger is only weeks into his tenure as the CEO at Ericsson
• He has identified areas of strategic focus and key cost challenges
• Narvinger is revamping the operational structure of the vendor and shrinking the management team
• He has also delivered his first set of quarterly results, with revenues up but margins squeezed

Little more than two weeks into his tenure as CEO at Ericsson, Per Narvinger, who took over from Börje Ekholm on 1 October, is stamping his authority on the shape and strategy of the giant Swedish vendor with a plan of action that includes a reorganisation of the company’s operational structure, a revamp of the top executive team and efforts to contain rising costs. 

News of the changes came as Narvinger hosted the vendor’s third-quarter earnings conference call, during which he was able to report a 7% year-on-year increase in revenues (on an ‘organic’ like-for-like basis) to 59.48bn Swedish krona (SEK) ($5.96bn), with each of the company’s three divisions – Networks, Cloud Software & Services, and Enterprise – reporting a year-on-year increase in organic sales, despite a lack of growth in the radio access network (RAN) equipment market. 

The numbers are less positive when it comes to margins, though, as the vendor’s reported and adjusted operating margins took a dive compared with a year ago, with the adjusted earnings before interest and tax (EBIT) margin slipping to 16.4% from 27.5% a year ago. Ericsson is, at least, still generating a net profit, though this also fell year on year by 49% to SEK 5.8bn ($580m). (The full set of results can be found in this announcement.) 

And storm clouds are brewing: Costs are on the rise as supply chain issues persist due to geopolitical incidents and trends as well as the technology component crunch factor caused by the high demand for processors, particularly memory chips. Like other network equipment vendors, Ericsson is able to work around near-term pressures for a while with “tactical actions” but, ultimately, it will be hit by component price rises and, in turn, it will have to increase its prices. “Customers understand, but no-one likes it,” Narvinger noted during the earnings webcast early on Thursday morning. 

With customers knowing that price rises are coming at some point, some will be tempted to make purchases now and stockpile the products for deployment later: There was an element of this in the third quarter, a trend that helped, in part, to give Ericsson’s sales a lift. 

That stockpiling tactic will not be restricted to the mobile networks sector and could help explain why global telco capital expenditures increased unexpectedly during the first half of this year (according to research firm Dell’Oro Group).

With costs rising, the new CEO is very focused on reducing Ericsson’s operating expenses and improving the company’s ability to react to changing market conditions, whether that be on the supply side or on the demand side from customers. So he’s making a number of changes.

As of 1 January 2027, the vendor is bringing together the North East Asia and South East Asia, Oceania and India operations under one ‘market area’ simply called Asia-Pacific, which will be led by Patrick Johansson, currently head of market area Europe, Middle East and Africa (EMEA). The recruitment process to find a new EMEA boss will now begin. 

“Bringing these markets together will enable Ericsson to operate more effectively across the region while maintaining a strong focus at country and customer level,” noted the company in this announcement. 

Chafic Nassif, currently head of North-East Asia, and Andres Vicente, currently head of South-East Asia, Oceania & India, both of whom are currently on the executive team, “will support the formation of the new unit and hand over responsibilities”on 31 December, after which it seems likely they will exit the company. 

The CEO is also shaking up the company’s enterprise division. 

At a time when “indoor and enterprise solutions… are expected to become even more important as high-performance mobile networks enable new use cases, such as AI agents and differentiated connectivity,” the enterprise wireless solutions unit is being split up and spread across the group “to better create R&D synergies and to create the scale needed to drive product innovation”. 

The unit’s neutral host and private 5G portfolios are being integrated into the Networks division, “which will consolidate areas working with indoor technology”, according to the vendor.

Wireless WAN solutions, which essentially is the Cradlepoint business that Ericsson acquired for $1.1bn in 2020, is remaining as a standalone business under the overview of Yossi Cohen, head of market area Americas. 

The current head of enterprise wireless solutions, Åsa Tamsons, will help with the changes and then leave at the end of the year. 

The other part of the enterprise division that Narvinger is keen to address is Global Communications Platform, which is essentially the Vonage business that was acquired for $6.2bn five years ago and which has since been the subject of impairment charges totalling $4bn. Essentially, Ericsson massively overpaid and has found to its cost that the Vonage business has not lit the expected fire under its enterprise division. A new CEO for the unit, Christophe Van de Weyer, was appointed in July, and Narvinger is expecting him to “look hard at the cost base as well as the growth” and “get the numbers back to black” by implementing cuts.

Narvinger’s focus isn’t all about cutting costs and streamlining Ericsson’s structure, though. He has been talking with customers to find out what they need and, as you might expect, AI-native strategies have been at the heart of the discussions. 

“A consistent theme was the need for more intelligent and autonomous networks to improve performance, efficiency, robustness and resilience. Ericsson is well positioned, and we are already seeing the efficiency gains from AI-enabled features in our portfolio being deployed in customer networks,” noted the CEO in his prepared remarks included in the vendor’s earnings press release. 

During the earnings conference call, he also highlighted the impact of AI on wireless network connectivity. “With the rapid development of AI, it’s obvious that many new applications are going to be dependent on mobile connectivity. This means that networks will need to be even more reliable and resilient in the future. We are well positioned to help our customers on this journey. With AI models optimised for their use cases and leveraging Ericsson’s purpose-built silicon, we enable our customers to get more out of their spectrum assets without increasing power consumption.”

An example of how Ericsson is currently targeting mobile operators’ needs with AI is the ongoing development of the vendor’s AI-native Link Adaptation product, which can improve spectral efficiency by 10% and which has already been deployed by three operators, noted Narvinger. That product was tested earlier this year with AT&T and recently with SoftBank Corp. in Japan, while Bell Canada tested it in 2025.  

- Ray Le Maistre, Editorial Director, TelecomTV