Stockholm - Swedish telecommunications giant Ericsson on Thursday reported a drop in third-quarter sales and net income, citing a "tougher market environment."

Net income - after losses and restructuring charges - shrunk 74 per cent to 800 million kronor (116 million dollars), the group said, while sales fell 4 per cent to 46.4 billion kronor.

"Sales of network equipment declined due to lower demand in the current tougher market environment. Despite lower volumes, Network margins remain stable," Ericsson Chief Executive Carl-Henric Svanberg said in a statement.

The group said credit was still "tight in several emerging markets," but reported "good development" in China, India, the US and Japan.

The results were weighed by the mobile phone maker Sony Ericsson, the 50-50 joint venture Ericsson operates with Japan's Sony.

Despite the global slowdown, Ericsson's outlook remained that the long-term fundamentals for the telecom industry were solid. Mobile subscriptions continued to increase even though the rate was slower compared with 2008, and data traffic was also increasing.

The group estimated there were 4.4 billion mobile phone subscriptions worldwide.

Svanberg - who is soon leaving the group to become chairman at British Petroleum (BP) - said Ericsson would continue with its savings measures, which are expected to save some 10 billion kronor by the second half of 2010. (dpa)