Ericsson, the world’s largest maker of mobile phone networks, is expected to report a 40 per cent plunge in its third-quarter operating profit.

Analysts expect average operating profit at the Swedish group to hit 3.40 billion kronor (£267 million), compared with 5.6 billion kronor this time last year.

The company, which is currently undergoing restructuring, has been hit by the economic downturn, with lucrative network replacement and upgrade work drying up in Europe as telecoms companies tighten their belts.

It is due to report its results for the three months between July and September on October 24.

Sony Ericsson, the Swedish group’s 50-50 joint venture with Japan’s Sony, is also struggling, having been hit by falling demand for mobile phones in Western Europe.

The handset maker, which has relied heavily on its mid-tier music and camera phones, is expected to report a €72 million pre-tax loss on Friday for July to September, compared with a €384 million profit a year earlier.

Nokia, which reports its third-quarter results tomorrow, is expected to report a 20 per cent drop in earnings per share.

In February this year Ericsson announced it would axe up to 4,000 jobs, or more than 5 per cent of its workforce, after reporting a 42 per cent plunge in profits in the fourth quarter of 2007.

The company said it hoped to save 4 billion kronor through the job losses.

Rival telecoms equipment makers, including Alcatel Lucent, the US-French group, and Canada’s Nortel, have also suffered as the market for mobile infrastructure continues to slow.

Alcatel Lucent, where Ben Verwaayen, the previous head of BT recently over as chief executive, has issued a string of profit warnings, while last month Nortel’s shares fell more than 45 per cent, plunging to their lowest level in the company's history, after the group cut revenue, sales and profit forecasts and said it was considering selling one of its businesses.

The companies are also facing stiff competition from Chinese equipment makers such as Huawei.

In August Ericsson announced it was putting its wireless microchip business into a joint venture with STMicroelectronics, its Franco-Italian rival, as the companies seek to expand their customer base in the face of slowing mobile phone sales.

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