Ericsson is shedding about 10% of its workforce in its home country of Sweden, with more job cuts expected. The job cuts could be the beginning of broader cost savings CEO Börje Ekholm hinted at during its most recent earnings call.

The telecommunications equipment giant reportedly plans to cut 1,400 jobs in Sweden, according to published reports. The company currently counts around 14,000 employees in the country.

Reports indicate Ericsson could announce further job cuts this week across its broader operations. The vendor counts more than 105,000 employees worldwide.

Ericsson last month reported disappointing fourth quarter and full-year 2022 results hampered by slowing 5G spend that the vendor expects will continue to lag heading into the new year and create operating uncertainty.

Ekholm explained to investors that operational headwinds increased in Q4, with “operators slowing the pace on network investments and that includes front-runner customers in many markets.”

Ekholm said those issues impacted sales in North America, which he expects to continue into 2023. That issue will see operators “continue to sweat the assets in response to the macroeconomic headwinds,” which he added will coincide with operators adjusting their inventory levels as supply chain challenges ease.

“We remain positive on the long-term outlook for our business,” the vendor noted in its earnings release. “However, the near-term outlook … remains uncertain.”

That uncertainty led Ericsson to implement a cost-saving plans that Ekholm said will start showing results during the second quarter of this year, with their full impact hitting by year-end. Those moves included corporate restructuring for some of the vendor’s business units.

Ericsson has also trimmed the reach of its cloud-focused efforts that have so far failed to meet expectations.

Ekholm said the vendor expects its cloud operations to hit breakeven for operating profits for its full 2023 fiscal year, “with gradual improvements in profitability thereafter towards much more attractive levels.”

That business did see sales growth in North America during Q4, which the vendor noted was due to 5G core contracts, but was offset by a drop in business across other regions. CFO Carl Mellander said the vendor took a $78 million charge in Q4 tied to its cloud and software business.

“The performance in this segment has clearly not been satisfactory historically,” Ekholm said, echoing past comments from Mellander.

Ericsson during its Capital Markets Day last month announced a new strategy for its cloud business that will see the vendor limit “subscale software development, accelerating automation to lower deployment and maintenance efforts, and changing focus from market share gains to profitable business.”

“We’re confident that the business is on path to reaching operating profit breakeven for the full year of 2023,” Ekholm said.

Ericsson’s Nordic rival Nokia announced similar trepidation for its cloud business, though it managed to enter 2023 with momentum. Nokia reported net sales growth for its Cloud and Network Services business, but also slashed gross margin expectations for that segment due to front-loaded financial investments.

Nokia’s management touted broad portfolio growth across Europe and “heavy growth” for its Mobile Networks division in India, including significant 5G RAN deals with India operators Bharti Airtel and Reliance Jio Infocomm. This growth has more than offset a slowdown in 5G spending by North America operators, which have stated plans to slash spending following their initial 5G deployments.

CFO Marco Wirén stated this change was “just like we expected because of the very front-end heavy load investments. … We expected that the [fourth quarter] would be a little bit muted, and that’s exactly what happened.”

Ericsson and Nokia could be set to grab U.S. market share following the Federal Communications Commission (FCC) recently adopting new rules prohibiting domestic telecommunication operators from acquiring and using networking and other equipment from Huawei, ZTE, and a handful of China-based telecommunication vendors deemed to pose a security threat to the nation’s communications network.

A recent Dell’Oro Group report indicated Ericsson was the world’s No. 2 RAN vendor behind Huawei, but is the largest vendor outside of China.