Wednesday 23 August 2017

Ericsson chairman to stand down as telecoms giant continues to struggle

Leif Johansson. REUTERS/Bob Strong
Leif Johansson. REUTERS/Bob Strong

Noor Nanji

The chairman of struggling telecoms giant Ericsson has announced he will stand down after six years in the role.

In a statement on Wednesday, Leif Johansson said he would not put himself forward for re-election at next year's annual shareholders meeting.

The Swedish firm has performed poorly, with shares losing almost half their value in the last two years as it battled to retain its relevance amid a fiercely competitive telecom market.

New chief executive Borje Ekholm launched a turnaround plan when he joined the group earlier this year, and Mr Johansson said with this strategy now under way, it was time for him to step down.

The move comes one month after activist investor Cevian Capital spent 1 billion US dollars on a 5.6pc stake in Ericsson.

Christer Gardell, Cevian's co-founder, said at the time that he saw "significant potential" in Ericsson. However, he was sharply critical of the board for the group's recent underperformance, saying that it had done "a very poor job".

While Mr Johansson did not directly attribute his departure to pressure from activist shareholders, it was implicit in his statement.

"The company now enters a new phase, with focus on execution, and we also have a new ownership constellation," he said.

"It is natural to let the owners jointly propose a chairman and well ahead of this I want to announce that I will not be available for a next term."

Ericsson's nomination committee has initiated the search for a replacement, the company said.

Press Association

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