Ericsson halts business in Russia; puts employees on paid leave

Ericsson, a Swedish multinational networking and telecommunications company, has recently stated that it is suspending its business in Russia indeterminately. The company has now put the employees on paid leave, six weeks after the telecom equipment giant started an assessment regarding the effect of Western sanctions on its operations.

The firm has recently said that it would be recording a 900 million crown ($95 million) provision in the first quarter for assets damaged and other exceptional costs related to the change.

According to a spokesperson, Ericsson at present employs 600 professionals in Russia.

Several Western companies have either suspended or withdrawn operations in Russia since its invasion of Ukraine in February, while various Western governments have executed sanctions.

Vladimir Putin, Russian President, sent his armed forces into Ukraine on what, according to him, is a "special military operation" to demilitarize and "denazify" Ukraine.

Ericsson had halted deliveries in February to customers in Russia, while the rival Nokia did so in early March.

An industry expert mentioned that the move was unavoidable after a swathe of sanctions.

It is said to be a massive loss to Nokia and Ericsson as they will not get paid for their networks.

The suspension will also be affecting the plans of Ericsson in the country as Russia said last year it would enlarge telecom operators' licenses beyond 2023 for networks on the condition that they begin building networks using only Russian equipment.

The manufacturing hubs of Ericsson are in Estonia and Poland, Europe.

In November last year, Nokia declared its plans to set up a joint venture with YADRO, one of the most recognized Russian developers and manufacturers of high-performance storage systems and servers, to build 5G and 4G telecom base stations in Russia.

Although, a recent statement issued by Nokia states that the firm complies with all the restrictions and sanctions and has suspended the deliveries to Russia for the time being.

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