Ericsson, which employs 1,700 people in the Republic, has no plans to ask shareholders for more money after a $3.16 billion (€3.67 billion) rights issue despite persistent market weakness, its chairman Mr Michael Treschow said yesterday.

"We are not planning a further rights issue," Mr Treschow said, following publication of the prospectus for the sale, which runs from August 15th to September 3rd.

The Swedish telecommunications firm, which has slashed thousands of jobs over the past 18 months, aims to use the proceeds of the rights issue to cut debt and weather the current slump in the market.

In the prospectus, Telefon AB LM Ericsson said it saw no sign of a recovery in demand for its main product, wireless networks, sales of which would fall more than 15 per cent this year because debt-laden telecoms operators have cut investment.

Some analysts have said that with a turnaround in demand nowhere in sight, the world's biggest producer of mobile networks may need more money later.

The one-for-one issue is underwritten but depends on major investors taking up shares as promised and on Ericsson's debt rating, already at junk status, not being cut by more than two notches.

Chief financial officer Mr Sten Fornell said Ericsson would pay back eight billion crowns (€866 million) of short-term debt and 14 billion crowns of long-term debt, and spend seven billion crowns to finance restructuring announced earlier.

"I think we can handle the situation over the next 18 months," Mr Fornell said.

The reduction of existing debt would help Ericsson borrow new money and its credit rating was likely to remain stable for now, he said.

Ericsson may also have to take back some customer loans it managed to sell to banks, but Mr Fornell said it could fund this from planned divestments and the savings from restructuring.

Mr Fornell reiterated that Ericsson expected demand for telecoms equipment to stabilise next year.

Any further deterioration in the market would be met by further cost-cutting and more divestments of non-core businesses. - (Additional reporting: Reuters)