Ericsson reported mixed first-quarter results that highlighted both the ongoing slowdown in overall telecommunication network equipment spending and the vendor’s ruthless focus on slashing operating expenses.

Ericsson’s sales plunged 15% during Q1 compared to the same quarter last year, impacted by the ongoing lull in 5G network spending by advanced markets that have already moved on initial deployments and a geographical impact from India, which is coming out of an intense 5G investment period.

CEO Börje Ekholm said during an earnings call that the vendor “continues to view the level of industry investments that’s unsustainably low but we can't in reality impact this in the short term,” further stating that the vendor expects this spending slow down to continue.

Ekholm added that what Ericsson can impact is its own spending, which the vendor has somewhat successfully focused on. This was highlighted by Ericsson posting a 66% year-over-year increase in net income.

“We're still in the early phases of the build out of 5G but the improvement in the market will ultimately be in the hands of our customers, and that will happen when traffic grows and new use cases can be launched,” Ekholm said. “In the meantime, we remain fully focused on managing what's in our control but at the same time making the critical investment that reinforces our long-term competitive positioning.”

That focus will be put to the test for the rest of the year as Ericsson doesn’t expect a big rebound until at least 2025. Ekholm dampened enthusiasm toward full-year market growth, noting that Dell’Oro Group estimates of the overall market declining 4% this year “may prove optimistic.”

Dell’Oro Group did recently state that Ericsson remained one of the world’s three largest telecom vendors, but lost market share last year to bitter rivals Nokia and Huawei.

One potential bright spot or the vendor is momentum around its recently announced open radio access network (RAN)-centric deal with AT&T, which Ekholm said should start to benefit Ericsson later this year.

“It's generating a lot of discussions in the market and basically with all customers that this is … a bit of an industry shaping type of contract where the customer in this case looks at the total opex envelope and the total capex envelope and tried to optimize the investments in revenue generating equipment,” Ekholm said of the deal. “When they look at this, this is starting to drive a similar discussion in many customer interactions. We saw that in Mobile World Congress just a few months ago in the end of February, where this was one of the key discussion items with a number of customers and we'll see how we can deliver on that going forward. But it puts us in a very interesting position of very interesting discussions with customers.”

Ericsson was a somewhat controversial choice for AT&T as the vendor has not been viewed as a leader in the open RAN space, but Ericsson does have an incumbent advantage.

“They have 65% of the network,” Rob Soni, VP of RAN technology at AT&T, told SDxCentral of Ericsson’s foothold in AT&T’s wireless network architecture. “They also have the scale to be able to accomplish and I think one of the challenges that we have with some of the newer non-incumbent RAN vendors is that they need a scale platform to build off of as opposed to building totally from scratch.”

Ericsson’s focus on reigning in its own spending was on the table during Q1 when it announced plans to cut up to 1,200 jobs in its home market of Sweden due to expectations for a “challenging mobile networks market in 2024.” Those cuts came on the heels of the vendor slashing 1,400 jobs in Sweden last year.

Ericsson also announced during Q1 that it had made progress toward fulfilling U.S. Department of Justice (DoJ) requirements tied to a 17-year long bribery scandal involving high-ranking government officials, the falsification of financial documents by the telecommunications equipment vendor and the possibility that funds were diverted to a terrorist organization.

The Sweden-based company reported that an independent compliance monitor appointed by the DoJ has certified Ericsson’s anti-corruption compliance program as having “satisfied requirements” and “functioning effectively.” That certification is a condition for Ericsson to fully meet the DoJ requirements and work toward fully removing the compliance program by June 2.

“This certification is an important and independent verification of Ericsson’s significant progress in strengthening its compliance and controls since entering into the 2019 DoJ settlement,” Jan Carlson, chairperson of Ericsson’s board of directors, noted in a statement. “This marks a positive step towards completion of the monitorship, which the company expects at the same time as the expiration of the term of the plea agreement, upon fulfillment of the remaining obligations of that agreement.”