ERIC Ericsson

By Matthias Verbergt 

STOCKHOLM-- Ericsson AB appointed Börje Ekholm as its new chief executive Wednesday, as the struggling Swedish telecom-equipment provider looks to turn around its business amid waning demand and stiff global competition.

Mr. Ekholm joins Ericsson from his current position as CEO of Patricia Industries, a division within Investor AB, a Swedish investment company that is Ericsson's largest shareholder, controlling over 20% of its voting rights.

Ericsson had been looking for a new CEO since it ousted Hans Vestberg in July, as the company is battling slowing demand for its cellphone towers and switches and faces fresh competitive threats from China's Huawei Technologies Co. and Nordic rival Nokia Corp.

Last week, Ericsson plunged to a third-quarter loss, hit by slowdown in spending by mobile-service providers on latest-generation, or 4G, networks, as many mobile-broadband projects were completed last year.

At the same time, Ericsson faces fierce competition from Finland's Nokia, which acquired rival telecom-equipment supplier Alcatel-Lucent SA, and Huawei, which is expanding aggressively world-wide.

Ericsson is betting big on the development of the next generation of wireless networks, or 5G, but the large-scale rollout of 5G networks won't happen before 2020, analysts say.

Meanwhile, Ericsson is cutting costs significantly. Earlier this month, it said it would cut 3,000 jobs in Sweden, as part of a global restructuring program aimed at saving 10 billion kronor ($1.12 billion) in annual operating expenses by the second half of 2017, compared with 2014.

Mr. Ekholm "has a solid understanding of both the technology and business implications of the ongoing convergence of telecoms, IT and media," said Leif Johansson, chairman of Ericsson's board of directors.

"As the networks and applications become even more important in a 5G connected world, our customers, and the industry, look for continuous innovation," Mr. Ekholm said in a statement.

Mr. Ekholm, 53 years old and a member of Ericsson's board over the past 10 years, will replace acting CEO Jan Frykhammar on Jan. 16, 2017.

Ericsson said Mr. Ekholm will remain a member of the board.

Write to Matthias Verbergt at Matthias.Verbergt@wsj.com

(END) Dow Jones Newswires

October 26, 2016 04:03 ET (08:03 GMT)

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