Ericsson says no hardware exported to Russia, only software support

Ericsson says no hardware exported to Russia, only software support

23 Sep    Finance News

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STOCKHOLM — Ericsson said on Friday it is only providing software and technical support to Russian clients and has not sold any telecommunications equipment to mobile operators there since the Ukraine war started, after Swedish media reported the company had continued its exports.

Shares of the company fell 4% in morning trading.

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Ericsson suspended its business in Russia in April and said in August that it would exit the country in the coming months. It recorded a charge of 900 million Swedish crowns ($81 million) and made 400 employees redundant in the country as it winds down operations.

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“Compliant with the sanctions we provide the software and technical assistance for those products that we have shipped prior to the invasion making it possible to withdraw while fulfilling contractual obligations,” a spokesperson said.

“When the sanctions were announced we stopped shipments to customers in Russia,” he said.

Rival Nokia, which has also announced plans to exit Russia before the end of the year, had said it does limited maintenance of critical networks to fulfill its contractual and humanitarian obligations.

Sveriges Radio Ekot reported that Ericsson had applied for 12 permits for exemptions from sanctions from Sweden’s Inspectorate of Strategic Products and was granted seven.

The sanctions list by the Swedish authority include software and technology linked to telecommunications.

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The media outlet also said the products which Ericsson received permission to export to Russia could be used for the military.

Ericsson said its products are designed for civilian use, not military.

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The Swedish authority issued a statement saying exemptions were related to civilian use and civilian end-users.

Two analysts said the Russia report is not going to look good for Ericsson which faced a scandal in February about payments to the Islamic State militant group in Iraq, triggering investigations by different U.S. agencies and eroding more than a third of its market value.

“Ericsson hasn’t breached any sanctions as it has obtained approval … but it still stands in pretty clear contrast to the statement in their Q2-report where they announce suspension of ‘all deliveries to customers in Russia’,” said Jyske Bank analyst Anders Haulund Vollesen.

“Even though mobile telephony is for civil use an export license is required mainly because of the advanced encryption technology that is embedded in our products, and this is to applicable for all countries,” the Ericsson spokesperson said.

($1 = 11.1164 Swedish crowns) (Reporting by Supantha Mukherjee in Stockholm; Editing by Toby Chopra)

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