Ericsson acquires telecom IT business in China, sheds jobs in Sweden

The Swedish telecom group Ericsson announced on 16 March 2015 that it has signed a definitive agreement to acquire the Chinese telecom business of Sunrise Technology, a provider of IT services in the operations and business support systems (OSS/BSS) domain. Sunrise Technology has a strong track record of delivering complex IT solutions to leading operators in China. The unit which is headquartered in Guangzhou, China, will continue to exist as a separate entity – serving customers in sectors other than telecom.

The news follows on a recent announcement to announce major redundancies in Sweden where Ericsson will shed 2,200 employees in Sweden. Approximately 1,000 employees – almost all of whom are based in Guangzhou – will join Ericsson by Q2 2015, subject to customary closing conditions. These employees have expertise in IT consulting; systems integration for charging and billing systems, customer relationship management and business intelligence/analytics solutions; and application development and maintenance.

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“The completion of this acquisition significantly strengthens our position in China and shows our commitment to the market,” says Mats H. Olsson, Senior Vice President and Head of Asia-Pacific at Ericsson. “The skills and experience of the Sunrise Technology employees will be key for us to continue providing leading services to our customers in China.”

Magnus Mandersson, Executive Vice President and Head of Business Unit Global Services at Ericsson, says: “China is the world’s biggest mobile market in terms of number of subscriptions, with 1.285 billion. Most of the country’s telecom operators are at the beginning of their IT transformation journeys, and will soon replace their legacy IT systems with next-generation solutions that will enable them to launch digital offerings. The acquisition of Sunrise Technology’s telecom business will boost our ability to serve mobile operators’ IT transformation needs in China, and is aligned with our strategy of becoming a global ICT leader.”

Ericsson’s strategy to create value builds on a combination of excelling in its core business and establishing leadership in targeted growth areas. The group says the acquisition of Sunrise Technology strengthens its position in OSS/BSS, which is one of the targeted areas. Great strides have been made already, with leading analyst firms describing Ericsson’s OSS/BSS portfolio as the most comprehensive offering in the telecom market. To maintain momentum in OSS/BSS, Ericsson has previously acquired companies such as Telcordia (2012), TeleOSS and Telcocell (2013), GEOSS (2014), and TimelessMIND (2015).

Meanwhile Ericsson continues with the next phase in global Cost and Efficiency program (announced in November, 2014.) This includes both headcount reductions (including on its home turf) as well as savings in external costs (for example related to the number of consultants and consolidation of IT portfolio) across operations globally. Efficiency measures started in 2015 will run through 2017 globally.

The cost and efficiency program activities mainly target structural improvements in R&D, Service Delivery and Supply globally to secure highly efficient, effective and industry-leading operations to support growth. The establishment of the three global ICT centers with a common test and development strategy and methodology for R&D is part of the long-term structural improvements and efficiencies. Ericsson is announced that 2,200 positions in Sweden, mainly in R&D and Supply, are subject to notice.

The program targets savings of approximately SEK 9 b. with full effect during 2017. This is a long-term initiative with an ambition to reduce operating expenses and cost of sales across all Ericsson’s operations, units and functions already in 2015 in order to fund growth in targeted growth areas.

Ericsson continues to execute on strategy to excel in core areas: Radio, Core and Transmission and Telecom Services, to fund growth in the targeted areas: IP networks, Cloud, TV & Media, OSS & BSS and Industry & Society. The pace of change is increasing in the industry, accelerated further by industries converging. The pace of change is also accelerating in Ericsson as the company transforms to ensure leadership in the ICT industry.

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