Over 1,000 jobs are at risk at Ericsson in Italy following the failure by the Swedish telecommunications company to secure a lucrative contract worth €1 billion to upgrade the network of Italy’s recently created joint-venture between Wind and 3 Italia.
3 Italia and Wind signed off on a deal to merge their local units in Italy in November, after a rigorous European Commission approval process, in a collaboration that creates the country’s largest operator. The companies aim to launch joint services in January.
However, it’s now likely that Ericsson will have to fire at least a quarter of its staff in Italy, following its failure to secure the contract for the network upgrade. It has been reported that the respective owners of 3 Italia and Wind, CK Hutchinson and Vimpel-Com have chosen China’s ZTE to carry out the network upgrade.
This has not yet been officially confirmed in Italy, but sources say ZTE have won the order – while it is believed Huawei and Nokia were also in contention for the order.
This is just the latest in a number of setbacks suffered by the struggling vendor. In October Ericsson announced that it would be slashing 3,000 jobs due to a combination of poor financial results and their failure to secure tenders for a number of vacant contracts that were up for grabs in the sector.
Ericsson has also had to fight off and refute allegations of bribery which came to light when former executives told the SEC that they had carried out a number of briberies across a whole host of different countries. One executive extraordinarily claimed Ericsson bribed the President of Costa Rica in order to secure a contract in the country.
All these setbacks, poor results and scandals have ultimately led to the inevitable departure of long-time CEO Hans Vestberg. He will officially leave his post at the beginning of next month where he will be replaced by Borje Ekholm. However, the incoming CEO now has to deal with this monumental setback in Italy – to go with all the other issues and problems urgently needing to be addressed at Ericsson.
Ekholm will be tasked with finding a way to revive the company’s fortunes amid an industry slump as operators curb investments in infrastructure.