Ericsson To Restructure Loss Making BSS Unit, Takes A Hit Of SEK 6 Bn

Ericsson today announced to take SEK 6.1 billion as one-time charges in Q4 to restructure its loss making BSS business. It also said that this business unit is not working out as the company expected. The Swedish telecom gear maker further said that its Revenue  Manager product has proven unsuccessful and has not earned ‘any revenue’.

“The company’s past BSS strategy included pursuing large transformation projects based on pre-integrated solutions, including development of a next generation BSS platform, the full-stack Revenue Manager. The strategy has not been successful and to date the full-stack Revenue Manager has not generated any revenues,” the company said in a statement.

The company will use the SEK 6.1 billion mainly for customer compensation payments, provisions for project delays, and write-down of intangible assets.

The vast majority of the provision amount will impact cash flow, starting in 2019 and continuing over several years as projects are completed, the company added.

This restructuring process will also see some job losses at the Swedish major.

However, the company expects the plan will work out this time and the restructuring would arrest the loss in 2019 and set the firm on progressive path with low single digit operating margin in 2020. Ericsson expects the BSS unit, Segment Digital Services will have 10-12% operating margin no later than 2022.

Its newly restructured BSS business will be more focusing towards 5G and IoT going further, the company said in a statement.

“Under the revised strategy investments will be increased in the established portfolio, Ericsson Digital BSS – making it ready for new business models related to 5G and IoT, including technology evolution to cloud native and micro services. Developed capabilities in Revenue Manager will be added to the established portfolio,” it added.

Ericsson will provide additional details on its restructuring plan during the fourth quarter and full year 2018 earnings report scheduled for January 25, 2019.

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