Swedish telecom equipment giant Ericsson AB signaled more workforce reductions ahead as demand for its core 5G radio access network gear remains stubbornly subdued, CEO Börje Ekholm warned in the company’s Q4 2025 earnings call. With total sales dipping 5% year-over-year to 236.7 billion Swedish kronor ($26.2 billion) but organic growth edging up 2%, Ericsson leaned on headcount trims to lift profitability. The firm slashed 5,400 jobs in 2025 alone, bringing its workforce to 88,800, and plans further global cuts beyond the 1,600 already flagged in Sweden.

“We expect to continue reducing headcount,” Mr. Ekholm stated bluntly, crediting the efficiency drive for an operating margin of 14.9% excluding a one-time gain from divesting its iconectiv stake—up from 11% in 2024. Net income rocketed to 28.7 billion kronor ($3.2 billion) from a mere 400 million kronor the prior year. Yet, the radio access network (RAN) market, which contracted 20% from $43.75 billion in 2022 to $35 billion in 2024 per Light Reading citing Omdia data, shows no rebound in sight.

RAN Demand Hits Prolonged Plateau

Mr. Ekholm described the market as “flattish,” with weak uptake for advanced 5G products among major operators. “Given the flattish market we are in, we will have to work continuously on R&D efficiency,” he said. R&D spending dropped 9% to 48.9 billion kronor ($5.4 billion), but the CEO vowed to sustain technology leadership through 2027 by prioritizing mission-critical networks, enterprise solutions, and defense applications.

Americas revenues tumbled 11% in Q4 to 22.9 billion kronor ($2.5 billion) amid fierce pricing from Chinese rivals like Huawei, while Europe grapples with 33-40% Chinese market share. An EU proposal from January 2026 could mandate Huawei removal within three years, opening “sizeable revenue opportunity” for trusted vendors like Ericsson, per Mr. Ekholm, though impacts may lag 12-18 months, as noted by Reuters.

Cloud software and services held steady at 62.7 billion kronor ($7 billion, up 6% organically) with a 6 billion kronor profit versus prior losses, but enterprise sales fell 15% to 21.1 billion kronor. Defense R&D will rise, tapping 3GPP standards for drones and sensing.

Humanoids Hype Meets Market Reality

Mr. Ekholm pinned hopes on “hyperconnectivity” visions like humanoids, drones, XR glasses, and real-time translation, all hinging on dense 5G standalone networks. “We are entering a very exciting area of what we can call hyperconnectivity. Think about humanoids, drones, or it could be connected glasses… Without investment in the latest 5G networks, none of that will be possible,” he remarked. China’s 10x denser grids fuel its AI edge, he added, urging global telcos to follow.

Yet no sales lift has materialized from 5G-powered humanoids, leaving Ericsson to trim costs. Cumulative cuts near 17,000 since 2022. Shares climbed 9% in Stockholm post-earnings but trail year-ago levels by 4%.

Geopolitical Tailwinds and Rival Pressures

Chinese vendors dominate Latin America and erode Europe, but EU rules could shift dynamics. Only six small EU states shun Chinese 5G gear as of late 2024, per Strand Consult via Light Reading. Ericsson eyes 15-18% margins via efficiency, proposing a SEK 3 dividend per share and SEK 15 billion buyback.

In Q4, organic sales grew 6% across segments, with 12% in cloud software. Market areas like Europe/Middle East/Africa and Southeast Asia expanded, offsetting North East Asia’s 27% drop from matured 5G markets, as detailed in Ericsson’s Q4 report.

Pivoting to New Revenue Streams

Fixed wireless access hit 150 million global subscribers in 2025. Vonage pioneered U.S. network API aggregation for fraud detection; Aduna covers five nations. Private 5G industrializes slowly. Defense budgets swell, with Ericsson boosting related R&D.

Competitor Nokia mirrors cuts, slashing 5,000 more jobs amid mobile networks losses, per Light Reading. Ericsson’s RAN share outside China hit 39% under Mr. Ekholm, but exposure demands vigilance.

Efficiency as the New Growth Engine

Productivity per employee rose to SEK 2.6 million ($280,000) in 2024 from SEK 2 million in 2017. Restructuring charges stay elevated into 2026. Analysts at Jefferies praised margin gains from software and cost discipline.

Mr. Ekholm stressed 5G standalone upgrades for physical AI. Recent deals with Telstra, Vodafone, and Japanese operators signal momentum. As RAN flattens, Ericsson bets on programmability and APIs to unlock 5G value, per Yahoo Finance earnings highlights.

Beyond RAN: Defense and Enterprise Horizons

Enterprise wireless sees traction, though overall down organically 5%. Mission-critical push yields gains. Net cash tops SEK 61 billion, funding bets on 5G Advanced and 6G evolution, not a new cycle.

Recent Ericsson trials include Realbotix humanoid robots at its Plano, Texas studio for training, nodding to the very hyperconnectivity Mr. Ekholm champions, via BusinessWire. Yet, without telco densification, humanoid dreams stay distant.