Ericsson suspends business in Russia, puts staff on paid leave

An Ericsson emblem is pictured at Cellular Earth Congress (MWC) in Shanghai, China June 28, 2019. REUTERS/Aly Song

STOCKHOLM, April 11 (Reuters) – Ericsson (ERICb.ST) is suspending its business in Russia indefinitely and has set workforce on paid depart, 6 weeks just after the Swedish telecom devices maker started off a assessment of the impact of Western sanctions on its operations.

The firm claimed on Monday it would record a 900 million crown ($95 million) provision in the first quarter for impairment of property and other fantastic expenses similar to the transfer.

Ericsson has about 600 staff in Russia, a spokesperson mentioned.

Hundreds of Western businesses have possibly withdrawn or suspended functions in Russia because the state invaded Ukraine in February while Western governments have imposed sanctions.

Russian President Vladimir Putin sent his troops into Ukraine on what he phone calls a “specific military procedure” to demilitarise and “denazify” Ukraine. Ukraine and the West say Putin launched an unprovoked war of aggression.

Ericsson experienced paused deliveries to buyers in Russia in February, and rival Nokia (NOKIA.HE) did so in early March.

“Shift was unavoidable subsequent a swathe of sanctions,” stated Paolo Pescatore, an analyst at PP Foresight. “It will be a enormous blow to each Ericsson and Nokia as they will not be paid out for their networks.”

The suspension will also damage Ericsson’s long run strategies in the place as Russia said previous 12 months it would lengthen telecoms operators’ licences past 2023 for networks on the affliction that they started creating networks employing only Russian tools.

Ericsson does not have any production in Russia and its producing hubs in Europe are in Estonia and Poland.

Nokia in November announced ideas to set up a joint undertaking with YADRO, a primary Russian developer and producer of higher-efficiency servers and storage methods, to establish 4G and 5G telecom base stations in Russia. browse extra

Nokia claimed in a statement the firm complies with all sanctions and limits and has suspended deliveries to Russia for the time staying.

“Nokia will not go on R&D in Russia and we have currently began the approach of transferring R&D duties outdoors of Russia,” the corporation claimed.

($1 = 9.4568 Swedish crowns)

(This story corrects title of analyst’s company in paragraph 7 to PP Foresight, not PP Insights.)

Reporting by Anna Ringstrom and Supantha Mukherjee
Editing by Simon Johnson and David Goodman

Our Requirements: The Thomson Reuters Rely on Ideas.