Ericsson retreats from field services, lays off 750

5G equipment supplier Ericsson said it would cut 750 employees from its North American business as it shutters its field services operation.

The move is part of a much wider retrenchment among 5G vendors as big network operators in the US dramatically slow their spending on their networks.

"Beginning October 1, 2023, all Ericsson US field services will be performed by our Authorized Service Providers to align with our global service delivery model. Since the inception of our field service delivery business in 2015, we have consistently worked with trusted and authorized external providers. 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. This change is limited to field-based delivery service by Ericsson employees," Ericsson wrote in a statement. The company's move was first reported by InsideTowers.

Continued Ericsson: "Ericsson's delivery of network services, from site design and engineering to continuous preemptive support and network optimization, will not change. The self-perform capability proved critical for us to accelerate local service delivery capabilities during the peak of the 5G cycle, with quality and an unwavering commitment to safety, setting a new standard for tower technicians in the US However with the downturn in market demand, we can no longer justify the cost this unique capability represents and this action will result in the reduction of more than 750 employees across the company's workforce in North America as a result of this change. We are committed to ensuring a seamless transition for our customers, employees, and partners through this transition and Ericsson remains committed to the end-to-end network engineering, roll-out, tuning, and optimization business."

The cuts are the latest within Ericsson. In February, the Swedish equipment maker confirmed about 8,500 roles globally would be axed, a figure equal to about 8% of the company's workforce. In Ericsson's North American operations, that resulted in cuts of about 5-7% from Ericsson's 12,000 employees in the region (in the US specifically, Ericsson counts 9,000 employees).

Ericsson officials didn't immediately respond to questions from Light Reading as to whether the new cuts in its field services business were included in the 8,500 job cuts announced in February.

A bigger trend

Ericsson isn't the only company to step away from offering 5G-related field services in the US. For example, cell tower owner Crown Castle said recently it would discontinue offering network installation services within its cell tower business. The company said it would cut around 750 positions, or 15% of its workforce, as a result.

The impetus for such actions is becoming increasingly clear. US network operators like T-Mobile, Verizon and AT&T are tightening their pursestrings much faster than expected.

"The recent pullback was more abrupt than our initial expectations," said Rod Smith, the CFO for cell tower giant American Tower, in comments last week. He said the situation is cutting $40 million out of American Tower's margin expectations.

Ericsson's CEO, Borje Ekholm, hinted at the situation earlier this month during his company's quarterly conference call. He said spending in North America reached "one of the lowest shares we've seen in many years."

To be clear, the pullback isn't exclusive to companies in the 5G equipment market. For example, Corning's CFO recently warned that "demand for passive optical network products remains weak."

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano