Ericsson benefits from $1B vendor financing deal with Telefónica

Telefónica secured a $1 billion (€770 million) export credit deal to purchase infrastructure equipment from Ericsson. The agreement is backed by two Swedish export authorities.

The Spanish-based operator said that the credit facility, better known as vendor financing, will see Ericsson supplying network equipment and commissioning services for various Telefónica subsidiaries around the world, according to Reuters.

Telefónica signed a similar vendor financing agreement for $472 million in 2010 to buy Ericsson equipment, with the backing of the same two Swedish export agencies--the Swedish National Export Guarantee Board and the Swedish Export Credit Corp.

This offer of financial support follows recent deals by Telefónica to use Ericsson's equipment in LTE deployments in the UK, Brazil and Chile, according to Seeking Alpha.

Telefónica reported full-year results last week that indicated the debt-laden operator was managing to stabilise its depressed domestic market. The company has reduced its debt to €51.3 billion at end of 2012 from over €58 billion last June, according to Reuters.

Separately, U.S. Sen. James Inhofe (R-Okla.) is raising concerns over Ericsson's business dealing in Iran, claiming that the company was assisting the Iranian state to commit human rights abuses with the help of its technology, according to the Financial Times.

Ericsson said in a statement to the FT that it has reduced its involvement in Iran since 2008 and was no longer signing any new contracts with Iranian telecoms firms. However, it added that it is still delivering equipment to the country.

For more:
- see this Reuters article
- see this Seeking Alpha article
- see this Financial Times article (sub. req.)

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