Despite Closing Business in Russia, Ericsson Still Exports Applications for Civilian Needs

Ericsson is still in business in Russia. (photo: twitter @ericsson)

JAKARTA – The Swedish telecommunications company, Ericsson, stated on Friday, September 23 that it only provides software and technical support for clients in Russia. They have not sold any telecommunications equipment to mobile operators there since the Ukraine war began. However, Swedish media reported that the company had resumed its exports to Russia.

Ericsson suspended its business in Russia in April. They said in August that they would be out of the country in the coming months. This cost 900 million Swedish crowns (Rp 1.2 trillion) and saw 400 employees laid off in the country when operations ceased.

"In accordance with the sanctions we are providing software and technical assistance for the products we shipped prior to the invasion so that they may be withdrawn while fulfilling contractual obligations," an Ericsson spokesman said.

"When the sanctions were announced, we stopped deliveries to customers in Russia," he said.

Rival Nokia, which has also announced plans to leave Russia before the end of the year, said it was limiting maintenance of critical networks to meet its contractual and humanitarian obligations.

Sveriges Radio Ekot reported that Ericsson had applied for 12 permits for sanctions relief from the Swedish Strategic Products Inspectorate but had only been granted seven permits.

The current list of sanctions by Swedish authorities includes software and technology related to telecommunications.

The media outlet also said that products that had Ericsson's export license to Russia could be used for military purposes. But Ericsson says its products are designed for civilian use, not military.

The Swedish authorities issued a statement saying the exceptions relate to the use of civil technology and civilian end users.

Two analysts said the Russia report would not look good for Ericsson, which faced a scandal in February over payments to the Islamic State militant group in Iraq, which sparked investigations by various US agencies and eroded more than a third of its market value.

"Ericsson hasn't violated any sanctions since it has obtained approval ... but that still stands in stark contrast to the statement in their Q2 report where they announced the suspension of 'all shipments to customers in Russia'," said Jyske Bank analyst Anders Haulund Vollesen.

"Even if the cell phone is for civilian use, an export license is required primarily because of the advanced encryption technology embedded in our products, and this applies to all countries," an Ericsson spokesperson said.