Ericsson said it has reserved a reserve of 2.3 billion Swedish crowns ($220 million) against expected fines from US authorities for breaches of the settlement reached in 2019.
Ericsson shares jumped 7.7% in afternoon trading. That’s because analysts expected a larger fine, matching his $1 billion he paid in 2019 as part of a bribery settlement.
“Considering that the market expected fines of $1 billion to $2 billion, this is an incredibly positive outcome.” JP Morgan analysts said in a note.
Ericsson settled a bribery allegation with US authorities in 2019 and agreed to a three-year review.However, it was unable to fully disclose the results of its internal investigation into possible payments to the Islamic State militant group. Iraqleading to more regulatory scrutiny.
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The stock has lost nearly a third of its value as investors worried about another huge fine since the company disclosed details of its investigation. U.S. Department of Justice and the Securities and Exchange Commission.
Ericsson’s announcement shows that a resolution is closer than the market expected, removing much of the deal’s overhang. Danske Bank Credit Check Analyst Mats Lindegard Rosendal Said.
The Swedish telecommunications equipment maker said it believes its provisions are based on sufficiently reliable estimates of financial penalties associated with resolving potential infringements.
This charge will be included in the fourth quarter results to be announced later this month.
“Our internal investigation into the 2019 Iraq-related internal investigation report allegations and cooperation with authorities remains open and ongoing,” Ericsson said.
Last month, we agreed to extend independent compliance monitoring through June 2024.
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