Israel’s ECI Telecom Challenged by Low Profitability in India, Strong Shekel
In December the company announced a plan to let go 6% of its workforce, citing increased global competition
Israel-based telecommunications equipment supplier ECI Telecom Ltd. had a great year, company executives said in a recent announcement. At the same time, the company said it will let go 100 Israeli employees, triggering protests directed at the company’s main shareholder. In interviews with Calcalist, two persons with close familiarity with the company’s financial data revealed that while the company sales are indeed on the rise, ECI is expecting to face headwinds in the coming year. Its main challenges: low profitability in India, reduced government support in Israel, and a strong shekel.
For daily updates, subscribe to our newsletter by clicking here.Established in 1961, ECI currently employs some 1,700 people, 800 of them in Israel. At its peak, in the late 1990s, ECI was considered an industry leader and employed around 6,000 people. Over the years the company’s revenues declined, and ECI sold or spun off some of its subsidiaries.
In 2017 the appreciation of the shekel against the U.S. dollar has added to the challenges faced by the company. ECI spends approximately $100 million in Israel annually, paid out in shekels, the two persons familiar with the details said. Last year’s appreciation in the value of the shekel cost ECI approximately $10 million, they said.On Monday, Calcalist reported that ECI won a networking contract with the Israeli military. The five-year contract reflects potential sales worth tens of millions of dollars.