Fitch downgrades Ericsson

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 IDR is negative.

Fitch said the downgrade and the negative outlook reflect Ericsson's warning on a weaker equipment market in 2017, implying heavier pressure on revenue and operating profit. Fitch said it believes the market outlook is likely to remain challenging for 2018, in view of the lack of clear revenue drivers in the short-to medium-term.

“We continue to see Ericsson as an investment-grade company. However, a significant financial recovery is unlikely before 2019 as we expect substantial restructuring charges to weigh on cash flow in both 2017 and 2018,” Fitch said in a news release.

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