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Ericsson is to axe 20,000 jobs over the next two years as the downturn in the mobile phone industry continues to bite.

Pre-tax losses widened to SEK5.4 billion (£360 million) in Q1 2002 from SEK4.9 billion (£330 million) during the corresponding period last year amid falling revenues.

Despite the gloom the Swedish mobile phone business claims it will return to profit some time in 2003.

Said Kurt Hellström, President and CEO of Ericsson: "As expected, this past quarter was very challenging…as many operators have recently lowered investment plans further."

Ericsson is relying on an "ongoing aggressive cost cutting" programme to reduce its cost base.

It is also looking to raise around SEK30 billion (32 billion) with a rights issue.

Looking ahead, Ericsson forecasts the global telecom equipment market, particularly wireless communications, will remain weak until well into next year, but will then return to long term growth. ®

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