Ericsson has announced an indefinite suspension of its business operations in Russia following the country’s invasion of Ukraine.
Reports of additional war crimes in towns such as Bucha and Irpin have prompted further sanctions from many in the international community. The Sweden-based company said the European Union’s expanded sanctions influenced its decision to halt affected activities in Russia.
In a statement, Ericsson said:
“In the light of recent events and of European Union sanctions, the company will now suspend its affected business with customers in Russia indefinitely.
Ericsson is engaging with customers and partners regarding the indefinite suspension of the affected business.”
Ericsson will place its employees in Russia on paid leave and stressed that their safety and wellbeing are the company’s top priorities.
The company expects to record a provision of SEK 0.9 billion (approximately US$95 million) in the first quarter of 2022 to cover asset impairments and other exceptional costs related to the suspension; this estimate excludes staff redundancy costs. Ericsson says roughly one-third of that amount will affect cash flow.
This indefinite suspension follows an earlier move in late February when Ericsson stopped all deliveries to customers in Russia. In March, rival vendor Nokia also announced it had suspended deliveries to Russia.
Both Ericsson and Nokia have been major suppliers to Russia’s telecommunications infrastructure. With their services reduced, Russia is likely to rely more heavily on Chinese suppliers such as Huawei and ZTE in the near term.
Huawei and ZTE are listed on the US Entity List, which restricts US companies from doing business with them. To date, neither Chinese vendor has announced a suspension of operations in Russia.
Since being added to the Entity List, Huawei and ZTE have depended on stockpiled American semiconductors for some equipment. Over time, those reserves will deplete and the companies will need to rely more on less advanced chips.
The Kremlin’s decision to invade a sovereign neighbour is expected to have long-term consequences for Russia — socially, politically, economically, and technologically. While state-controlled media continue to withhold or manage information about the conflict and military losses, ordinary Russians will increasingly experience the consequences of their government’s actions.
(Image Credit: Ericsson)
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