Fitch downgrades Ericsson to BBB

Fitch Ratings said it downgraded Telefonaktiebolaget LM Ericsson's long-term issuer default rating and senior unsecured rating to BBB from BBB+.

The outlook on the issuer default rating is negative.

Fitch said the downgrade and the negative outlook reflect operating and financial challenges facing Ericsson, at least over the next 18 to 24 months. Significant revenue pressure in the core networks segment and a re-sizing of the media and IT/cloud segments, and continued R&D expenditure are likely to weigh on operating profit, the agency explained.

In addition, significant restructuring costs are likely to lead to negative free cash flow in 2017.

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