During H1 2024, Ericsson NT recorded a revenue decrease of 21% YoY, an EBITDA decline of 10%, and a net income of EUR 7.7m, a decrease of 36% YoY.
Starting with sales revenue, it amounted to EUR 108m during H1 2024, a decrease of 21.1% YoY. Ericsson NT noted that despite contracting new business deals in the operator segment in the Croatian and export markets, as well as in the Digital Society segment, the non-renewal of the contract with HT regarding managed services resulted in the decline of sales revenue. The decrease was further exacerbated by operators’ cautious investments in network modernization and the dynamics of implementing contracted activities. The company also stated they have new projects in the digital transformation of state administration, public services, security, healthcare, and the expansion, modernization, and maintenance of communication infrastructure underway. Furthermore, with the realization of contracts in export markets and new opportunities in the Digital Society segment, Ericsson NT expects better top-line performance for the rest of the year.
Breaking down the revenue by markets, domestic market revenue amounted to EUR 23.4m, a 54.8% decline YoY, due to the aforementioned non-renewal of the contract with HT and cautious investments by operators in network optimization. Ericsson NT highlighted that at the beginning of 2024, they signed a cooperation agreement with HT, making Ericsson NT the exclusive supplier of the radio part of HT’s mobile network until 2027. The Company has also been working with A1 Hrvatska, under multi-year framework contracts, to expand the coverage and capacity of the 5G radio network, and to modernize and construct the convergent core network.
In the export markets (excluding services to Ericsson), revenue amounted to EUR 14.4m, a 3.6% increase YoY due to the realization of contracted activities. The Company signed a multi-year framework contract with Telekom Kosova for the complete modernization and maintenance of the radio network. With Kosovo operator IPKO, several projects for the modernization and maintenance of the core network were contracted. Additionally, with HT Mostar, the implementation of the latest technological version of Ericsson Evolved Packet Core (EPC) and Diameter Signaling Controller (DSC) solutions was contracted. Projects were also contracted with Crnogorski Telekom and Ucom Armenia for the modernization and maintenance of mobile networks.
In the Ericsson market, revenue amounted to EUR 71.1m, a 1.5% decrease due to a higher engagement of the Services and Solutions Center’s experts on projects for the customers of Ericsson Nikola Tesla. Breaking down revenue by segments, the Networks segment, which accounts for 65% of total sales, recorded EUR 71.1m in revenue, a 0.8% decrease YoY. The Services segment, accounting for 33% of total sales, captured EUR 36.2m in revenue, a 2% increase YoY. The Managed Services segment, which in H1 2023 accounted for 22% of total sales, now captured only 1% of revenue due to discontinued operations with Hrvatski Telecom, recording EUR 1.3m in sales (a 96% decline YoY). The Other segment recorded EUR 269k, up 11% YoY.
Ericsson NT sales breakdown by market (H1 2017 – H1 2024, EURm)
Source: Ericsson NT, InterCapital Research
The EBITDA decreased 10.8% YoY to EUR 15.8m. The EBITDA margin was 14.6%, an increase of 1.7 p.p. YoY, driven by operating expenses declining faster than revenue. In H1 2024, OPEX decreased 21.7% YoY to EUR 98.6m. The main driver of this decrease was the cost of raw materials and consumables, which declined 39.7% YoY to EUR 36.7m, while net salaries and wages declined 9.2% YoY to EUR 61.1m. This suggests that inflationary pressures, especially for material costs, have largely dissipated. Moving on, the net financial result was positive at EUR 540k (H1 2023: EUR 119k), leading to worse net income dynamics compared to EBITDA. As such, a net income of EUR 7.7m experienced a 36.6% decrease YoY. Consequently, the net margin declined by 5.4 p.p. to 12.6%.
Ericsson NT key financials (H1 2024 vs. H1 2023, EURm)
Source: Ericsson NT, InterCapital Research
