Ericsson is laying off 750 field services employees in the U.S., as first reported by Inside Towers.
Ericsson says that beginning October 1, all Ericsson U.S. field services will be performed by its authorized service providers.
“Since the inception of our field service delivery business in 2015, we have consistently worked with trusted and authorized external providers,” stated Ericsson in an email to Fierce Wireless. “This strategic change will provide added flexibility, reduce costs, and simplify our operations, allowing us to operate more efficiently and better serve the changing needs of our customers.”
The company said its delivery of network services, from site design and engineering to continuous preemptive support and network optimization, will not change.
It said having Ericsson employees was critical during the peak of the 5G cycle, “with quality and an unwavering commitment to safety, setting a new standard for tower technicians in the U.S.”
But Ericsson noted a “downturn in market demand,” and said it can no longer justify the cost of maintaining Ericsson field service employees in the U.S.
The company had announced in February that it planned to cut 8,500 jobs in its global operations over the next couple years.
Ericsson and Nokia see downturn
In a bit of a surprise for investors, both Ericsson and Nokia reported downturns in their North American 5G business during their recent 2Q 2023 earnings calls.
Ericsson reported North American net sales for the quarter of $1.4 billion, down from $2.23 billion in Q2 of 2022. Ericsson President and CEO Borje Ekholm told investors that the U.S. market is the most advanced in its 5G deployment, but he said operators are going to need to densify their networks, which will require them to deploy more 5G sites and therefore purchase more 5G base stations.
For its part, Nokia reported a 40% decline in net sales year-over-year in North America during the quarter.
The pain felt by Nokia and Ericsson comes as the top three U.S. wireless carriers are scaling back their capital expenditures for 5G.
Verizon said its capex for the second quarter came in at $4.1 billion, reflecting the completion of its $10 billion accelerated C-Band program. Capital spending for the first half of the year totaled $10.1 billion, which was over $400 million less than last year. It expects 2023 capital spending to be within its guidance of $18.25 billion to $19.25 billion. “Our peak capital spend is behind us, and we are now at a business-as-usual run rate for capex, which we expect will continue into 2024,” said Verizon CFO Tony Skiadas.
AT&T is spending the most on capex this year, estimating $24 billion. In the first half of the year, it spent $12.3 billion to $12.4 billion. But AT&T’s CFO Pascal Desroches said, “We are past peak investment as we exit this year. And we'll give our guidance at the same time as we usually do. But clearly, we don't expect to be at the levels of capital you've seen us invest in 2022 and 2023.”
T-Mobile said it expects cash capex for 2023 to be between $9.5 billion and $9.7 billion. “We expect capex to taper in Q3 and then further in Q4,” said T-Mobile CFO Peter Osvaldik.
The big three wireless carriers have been signaling lower capex spends for a while now.
Meanwhile, Dish Wireless said during its Q1 2023 earnings call that now that it has reached 70% of the U.S. population with its new 5G network, it plans to take a breather from its network build.