Ericsson ousts CEO Hans Vestberg; CFO to take his place temporarily

Swedish telecom gear maker Ericsson has ousted its CEO and President Hans Vestberg amid fall in revenues and the company putting in place a "strong" action plan to reduce cost.

Jan Frykhammar, who is currently Executive Vice-President and CFO, will assume the CEO position until a new CEO is in office.

Ericsson, whose performance has suffered in the past few quarters, said, "The time is right for a new leader to drive the next phase in Ericsson's development."

Vestberg will support the board and management during his term of notice of six months.

"Hans Vestberg has led the company for seven years through significant industry and company transformation. However, in the current environment and as the company accelerates its strategy execution, the Board of Directors has decided that the time is right for a new leader to drive the next phase in Ericsson's development," Ericsson Chairman Leif Johansson said in a statement today.

Last month, Ericsson confirmed that it was cooperating with US authorities in an investigation related to the Foreign Corrupt Practices Act. While it did not provide details of the exact nature of the probe, it said the matter was related to its anti-corruption programme.

The company reported 11% year-on-year decline in sales for the second quarter of 2016, while profit fell 26 per cent.

While Ericsson has announced a comprehensive restructuring and cost-cutting programme, Vestberg has been criticised over his leadership and pay.

In recent weeks, Vestberg has also faced questions over his use of a corporate jet to travel to sports events and his appointment as chair of Sweden's Olympic Committee (SOC) when Ericsson is having to cut costs and rethink its strategy.

Vestberg has defended himself saying the trips were with clients and were not in breach of Ericsson policy.

Ericsson today said it has put in place a "strong action plan" to significantly reduce cost and adapt to the current market environment.

"As stated in the report the Board fully supports the cost reduction plans. In addition, the Board supports the company business strategy and new company structure," Johansson said.

Ericsson's search process will comprise both internal and external candidates, the statement said.

Frykhammar joined Ericsson in 1991 and has held various positions in finance and business control. In 2009, Frykhammar became Executive Vice President, CFO and Head of Group Function Finance.

Previously, he was Head of Business Unit Global Services at Ericsson.

Carl Mellander, currently VP and Group Treasurer, is appointed acting CFO with immediate effect.

With falling market share, Ericsson has had to lay off thousands of workers this year and last week said it is still looking to drastically cut costs.