Ericsson forecast a slightly slower rate of growth for the global telecom market in the coming period, but said it still expects to outperform the market. At its latest Capital Markets Day, the company said the total addressable market will show an estimated CAGR of 2-4 percent in 2014-2018, compared to the company’s forecast of 3-5 percent growth for 2013-2017.
In addition to growing its core business of radio, core and transmission network equipment, Ericsson outlined adjacent targeted areas where it expects to exceed the market CAGR of 10 percent per year. These areas – cloud, IP networks, TV and media, OSS and BSS, as well as the ‘Industry & Society’ sector – will contribute around SEK 45 billion in revenue to the company this year, up from SEK 35 billion a year ago. The just announced partnership with Cisco is also expected to generate USD 1 billion or more of additional sales by 2018.
Ericsson also confirmed its target for SEK 9 billion in annual costs savings by 2017. However, the one-time costs of the restructuring needed to achieve the savings will be higher than initially forecast, at SEK 3.4-4.5 billion in 2015-2017, versus the first estimate of SEK 3-4 billion. Ericsson said around half the savings will reduce operating expenses and the other half will impact cost of sales.