STOCKHOLM (Reuters) - Swedish mobile network gear maker Ericsson (ERICb.ST) booked an impairment of 14.2 billion crowns ($1.8 billion) in the fourth quarter, related primarily to goodwill in its digital and media operations, hitting operating income but not cashflow.
It had flagged in December it may make a goodwill impairment at its struggling digital services and media businesses
“The majority of goodwill originates from investments made 10 years ago or more, and has limited relevance for Ericsson’s business going forward,” Ericsson said in a statement.
Once the world’s biggest manufacturer of mobile network gear, Ericsson has been hit by competition from Huawei [HWT.UL] and Nokia (NOKIA.HE), while telecom operator spending has slumped ahead of the roll-out of next-generation 5G technology.
Ericsson, which has cut costs and reorganised in response, has uncovered the need for impairments following its new reporting structure from the fourth quarter.
Ericsson has booked goodwill impairment of 6.7 billion crowns in its digital business and 6.0 billion crowns in the unit that includes its media operations.
It also said a revaluataion of U.S. deferred tax assets due to change in the U.S. corporate income tax rate resulted in a non-cash charge of 1 billion crowns.
($1 = 8.0335 Swedish crowns)
Reporting by Helena Soderpalm and Olof Swahnberg, editing by Louise Heavens