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DEFENCE

Ericsson sells defence arm to Saab

Swedish telecoms giant Ericsson is selling its defence arm Ericsson Microwave Systems to aerospace company Saab for 3.8 billion kronor in cash, according to a press release from Ericsson.

The market reported positively to the news, with Ericsson’s B shares rising 0.4 percent on the Stockholm exchange in opening trading on Monday.

Some 1,250 employees will be transferred from Ericsson to Saab through the sale, which will be finalized in September.

Ericsson’s deputy CEO Hans Westberg said that there had been several expressions of interest from other companies in Ericsson Microwave Systems.

“We have had a number of potential buyers and we have taken into consideration both price and the buyers’ possibilities to create a future for the company’s competence and technology. Saab was best in all aspects of this. We therefore feel very satisfied with this process,” he told news agency TT.

The sale includes Ericsson’s 20 percent share in the JAS warplane project, as well as Ericsson’s stakes in Thales, EAW Systems and Ericsson Saab Surveillance Systems. Saab also takes over Ericsson’s stake in Saab Ericsson Space.

“The advanced radar development focusing on defense customers has today less synergies with Ericsson’s core business. As a result of the agreement, we will strengthen our focus on telecommunications,” said Ericsson CEO Carl-Henric Svanberg.

“We are also very confident about the future prospects for the National Security and Public Safety area, which will remain within Ericsson, where the development has just recently started to take off,” Svanberg added.

The expected capital gain of approximately 3 billion kronor is roughly equal to Ericsson’s previously announced restructuring costs after the purchase of Marconi and the company’s restructuring of its workforce, the press release said, concluding that this would lead to a neutral effect on Ericsson’s income.

Saab said that the purchase was being funded using existing cash reserves, and that the payment was expected to be made in September 2006. The purchase is expected to have a positive effect on the company’s profit per share from 2007. This year, the purchase will mean a “slightly reduced” operating profit and profit per share.

SWEDEN AND UKRAINE

Ericsson suspends all Russia operations indefinitely

Swedish network equipment maker Ericsson said Monday that it was suspending all of its Russian operations over the war in Ukraine for the foreseeable future.

Ericsson suspends all Russia operations indefinitely

The telecom giant already announced in late February that it would stop all deliveries to Russia following Moscow’s February 24 invasion of Ukraine.

“In the light of recent events and of European Union sanctions, the company will now suspend its affected business with customers in Russia indefinitely,” Ericsson said in a statement.

The company added that it was “engaging with customers and partners regarding the indefinite suspension of the affected business.”

“The priority is to focus on the safety and well-being of Ericsson employees in Russia and they will be placed on paid leave,” it said.

READ ALSO: How has Sweden responded to Putin’s war in Ukraine so far?

Hundreds of Western firms ranging from Ikea to Coca-Cola, Goldman Sachs and McDonald’s have stopped operations in the country since the invasion, with French banking group Societe Generale announcing Monday it was selling its stake in Russia’s Rosbank.

Ericsson has around 600 employees in Russia, and is a “major supplier to the largest operator MTS and the fourth largest operator Tele2,” a company spokeswoman told AFP, adding that together with Ukraine, Russia accounts for less than two percent of revenue.

As a result, the equipment maker said it would record a provision for 900 million Swedish kronor ($95 million, 87 million euros) for the first quarter of 2022 for “impairment of assets and other exceptional costs,” though no staff redundancy costs were included.
Ericsson is due to publish its first quarter earnings on April 14.

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